Inflation in the United States edged up in July after 12 straight months of declines. But excluding volatile food and energy costs, so-called core inflation matched the smallest monthly rise in nearly two years, a sign that the Federal Reserve’s interest rate hikes have continued to slow price increases.
The inflation data the government reported Thursday showed that overall consumer prices rose 3.2% from a year earlier. That was up slightly from a 3% annual rise in June, which was the lowest rate in more than two years. The latest figure remained far below last year’s peak of 9.1%, though still above the Fed’s 2% inflation target.
The Fed, economists and investors, though, pay particular attention to core inflation figures for signs of where price pressures might be headed. From June to July, core inflation remained a tame 0.2%, thanks to easing prices for such items as used vehicles and electronics. And compared with 12 months earlier, core prices rose 4.7% in July, the smallest such increase since October 2021.
“Core prices are moving in the right direction,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “That will be welcome news to (the Fed’s) policymakers.”
Thursday’s price data will be among the key barometers the central bank will weigh in deciding whether to continue raising interest rates. In its drive to tame inflation, the Fed has raised its benchmark rate 11 times since March 2022 to a 22-year high.
In the 25-county region that includes the New York metropolitan area and Long Island, consumer prices rose 0.4% for the second consecutive month in July. Much of the July increase was attributed to higher prices for shelter. Food prices were unchanged. Energy prices increased 1.1% over the month, primarily due to higher prices for household energy. Gasoline prices rose 0.9%.
Overall prices nationwide, measured on a month-to-month basis, rose 0.2% in July; roughly 90% of it reflected higher housing costs….
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