Image courtesy Yahoo FinanceInflation reaccelerated in July for the first time in 13 months.
But beneath the surface of the 3.2% headline number revealed in Thursday’s Consumer Price Index (CPI) report are several signs the Federal Reserve’s fight against inflation is headed in the right direction.
“The July CPI report offered more convincing evidence that inflation pressures are abating,” EY-Parthenon senior economist Lydia Boussour said on Thursday.
Fuel price increases helped force headline inflation back up in July. When looking at “core” inflation, the Fed’s preferred inflation gauge that strips out the volatile food and energy categories, prices rose at their slowest pace since October 2021. Core prices increased 4.7% year over year in July, down from 4.8% in June and 5.9% in July 2022.
On a monthly basis, core CPI increased 0.2% for the second straight month, marking the first time since February 2021 that core CPI rose just 0.2% in consecutive months. Stocks rose following the report.
“The report was encouraging,” Bank of America U.S. economist Stephen Juneau wrote in a note on Thursday. “Sequential growth in core inflation continues to trend lower, and we wouldn’t be surprised to see another soft August print given declines in wholesale used car prices. While (month-over-month) inflation is still likely to be bumpy, we believe that the current disinflation is not a ‘head fake.’”
Click here to read the full report from Josh Schafer at Yahoo Finance.
