Overall CPI Up 0.5 Percent in July: Higher Car Prices Still Driving Inflation

The overall CPI is up 0.5 percent in July, the core is up 0.5 percent. Both are up 5.4 and 4.3 percent year-over-year, respectively. Most of the inflation is either bounce back or temporary disruptions, mostly with cars. Rental inflation remains moderate. Prices are stable or declining in other important areas like medical services, drugs, and apparel.

+ Medical care service prices are still moderate, rising 0.3 percent in July after falling 0.1 percent in May and being flat in June; up 0.8 percent year-over-year.

+ Prescription drug prices fall 0.1 percent, down 2.5 percent year-over-year.

+ Apparel prices are flat after 1.2 percent and 0.7 percent jumps in the prior two months. This is clearly a reversal of pandemic declines.

+ We may be seeing climate effects on CPI. The fresh fruit index is up 5.2 percent year-over-year. Hot weather destroying crops means higher prices.

+ The index for car and truck rentals fell 4.6 percent in July after rises of 12.1 percent in May and 5.2 percent in June; up 73.5 percent year-over-year.

+ Car insurance fell 2.8 percent in the month after 0.7 percent and 1.2 percent jumps in May and June.

+ New vehicle prices jumped 1.7 percent, due to the semiconductor shortage, and accounted for 0.08  percentage points of the core increase.

+ Inflation in rent indexes is still moderate. Rent proper is up 0.2 percent and owners’ equivalent rent is up 0.3 percent. Both are up 1.9 percent and 2.4 percent year-over-year, respectively.

+ Lodging away from home is up 6.0 percent in July, adding 0.08 percentage points to monthly inflation.

+ Television prices are up another 1.6 percent after rises of 0.9 percent and 1.3 percent in May and June, up 9.9 percent year-over-year.

+ The energy index is up 1.6 percent, up 23.8 percent year-over-year. This will likely be partially reversed in the months ahead as oil prices are trending downward.

This first appeared on Dean Baker’s Beat the Press blog.

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC.