Inflation Rate Eases In July With Fall In Gas Prices

Ted Johnson
·2 min read

Inflation showed signs of easing in July, due to the fall in gas prices while the cost of other categories of items remained flat.

The Consumer Price Index was unchanged during the month, and at a rate of 8.5% over the past 12 months. The latter figures was 9.1% in June.

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The latest figures, from the Bureau of Labor Statistics, are welcoming news for the Federal Reserve, in the midst of an effort to curb price increases but not send the economy back into a recession.

The index tracking the price of gasoline fell 7.7%. That offset some of the increases elsewhere, including the cost of food. There also were increases in medical care, motor vehicle insurance, household furnishings and operations, new vehicles and recreation. Other declines were seen in airline fares, used cars and trucks, communication and apparel.

Taking out food and energy costs, the index rose by 5.9% over the last 12 months.

“Finally some good news on the inflation front,” Justin Wolfers, professor at the University of Michigan, wrote on Twitter. “We’ve likely seen the inflation peak.” He cautioned, though, that it was just one month’s numbers but that “it may be the start of a disinflationary trend.” He noted that core inflation was at 0.3%, below the 0.5% that was expected.

Mark Zandi, chief economist at Moodys Analytics, wrote, “Inflation remains painfully high, but the worst appears to be behind us. Inflation should moderate in the coming months and return to the Fed’s inflation target by spring ’24. Of course, there are many threats to this inflation optimism, but today is a good day to be an inflation optimist.”

 

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