July’s Consumer Price Index (CPI) report showed inflation continued to ease. Headline CPI rose 3.4% year over year, down from 3.5% in June, while core CPI, which excludes food and energy, slowed to 2.5% from 2.6%.
On a monthly basis, headline prices rose 0.1% in July after falling 0.4% in June, as increases in shelter and food outweighed the 1.5% decline in energy prices. Core prices rose 0.2% after remaining unchanged in June, driven by increases in medical care, airline fares, communication, education, and recreation, partly offset by a decline in motor vehicle insurance.
Shelter rose 0.1% in July, matching June’s pace, but accounted for roughly two-thirds of the month’s overall increase. Shelter costs are up 3.2% over the past year and remain the largest contributor to core inflation, although the modest monthly increase suggests housing-related inflation continues to cool. Energy prices, meanwhile, remain an important source of uncertainty. Despite July’s 1.5% monthly decline, the energy index is still up 14.7% over the past year, and renewed tensions in the Middle East could put upward pressure on energy prices in the months ahead.
For investors, the broader takeaway is that easing inflation and evidence of a cooling labor market from last week’s employment report could reduce pressure on the Federal Reserve to raise interest rates in the near term. However, developments in the Middle East and continued moderation in shelter costs will remain important for sustaining progress toward lower inflation.
Disclosure
This material is provided by Gryphon Financial Partners, LLC (“Gryphon”) for informational purposes only. It is not intended as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, though Gryphon cannot guarantee their accuracy or completeness. Gryphon does not provide tax, accounting, or legal advice. Individuals should seek such guidance from qualified professionals