Consumer prices showed a faster year-over-year increase in July compared to the previous month’s annual gain, according to the latest data from the Bureau of Labor Statistics released Thursday morning.
The Consumer Price Index (CPI) rose 3.2% in July over the prior year, a slight acceleration from June’s 3% annual increase. Prices were up 0.2% in July from the previous month, in-line with June’s 0.2% month-over-month increase.
Both measures were roughly in line with economist forecasts, according to data from Bloomberg.
On a “core” basis, which strips out the more volatile costs of food and gas, prices in July climbed 0.2% over the prior month and 4.7% over last year — roughly on par with June. Both measures were also in-line with economist expectations.
The annual core increase was the smallest increase in that index since October 2021.
Core inflation remained especially sticky last month as rent prices continue to surge. The index for rent and owners’ equivalent rose 0.4% and 0.5%, respectively. Owners’ equivalent rent is the hypothetical rent a homeowner would pay.
The shelter index was the largest factor in the monthly increase of core inflation. Among the other indexes that rose in July was the index for motor vehicle insurance, which increased 2.0% after rising 1.7% the preceding month. The indexes for education and recreation also increased in July, the BLS noted.
Still, other indexes did see prices soften such as airline fares, which fell 8.1% — its fourth consecutive monthly decline — along with the prices for used cars and trucks, which dropped 1.3% in July after seeing prices fall 0.5% in June.
Inflation has remained significantly above the Federal Reserve’s 2% target.
That, along with a labor market that Fed Chair Jerome Powell has described as “very tight,” suggests the Federal Reserve will continue to raise interest rates later this year. But prior to the report, markets were widely expecting the central bank to pause its hikes at its meeting next month.
Immediately following the release of the data, markets were pricing in a roughly 85% chance the Federal Reserve keeps rates unchanged at its Sept. 20 policy meeting, according to data from the CME Group.
The central bank raised rates by another 0.25% in July after pausing its aggressive rate-hiking cycle in June.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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