According to data from the U.S. Department of Labor issued on Wednesday, consumer price index (CPI) topline inflation remained flat — although it showed an 8.5% increase from one year ago.
What Happened: Core prices increased at a 0.3% annual rate in July and 5.9% over the previous 12 months. On a monthly basis, transportation costs decreased by 2.1%, airfares dropped by 7.8%, and goods, excluding food and beverages, decreased by 1.4%.
In July, price declines in commodities, including oil and gasoline, slowed the pace of top-line inflation while core inflation remained elevated.
Gas Prices Are Lower: Gas prices have fallen for 56 consecutive days as of Wednesday, with the national average in the U.S at $4.01, down $0.67, or 14.3% from one month ago. Americans spent around $400 million less on gas than they did the month before, which will provide immediate relief to struggling households.
CPI Declines, But Still Challenges: A 19.96% reduction in gasoline prices since the June 14 peak of $5.01 per gallon, which contributed to a 7.7% decline in the July CPI, coupled with declining input prices should boost overall economic activity in the current quarter. Energy costs fell 4.6% in July, while energy commodities fell 7.6%, highlighting the drop in oil and gasoline prices which began in June.
A 10.5% increase in food prices and the 7.4% increase in housing costs will continue to burden household discretionary income.
Fed policymakers have stated that they want to see months of evidence that prices are dropping, particularly in the core gauge.
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