US inflation eases to 2.9% in July, underlying inflation falls to 3.2%

CdM | The US consumer price index (CPI) fell to 2.9% in July from 3% in June, compared to the same period last year, according to data from the US Bureau of Labor Statistics. Core inflation, which excludes food and energy, fell to 3.2% from 3.3% in the previous month. Both figures were in line with consensus forecasts.

In the US, inflation continues to slow, with the headline index now at its lowest level since March 2021, although still above the Federal Reserve's annual target of 2%. Core CPI, meanwhile, has fallen to its lowest level since April 2021.

On a monthly basis, the headline CPI rose 0.2% in July, as expected, returning to growth territory after the 0.1% decline in June. The core rate also followed the script, rising 0.2%, an acceleration from the 0.1% increase in the previous month.

The agency that disseminates the data highlights that “the housing index rose by 0.4% in July, accounting for almost 90% of the monthly increase in the overall index.”

In July, the food index rose 0.2%, with out-of-home consumption increasing 0.2% while the at-home consumption index rose 0.1%. These figures result in an annual increase of 2.2% for food, led by a 4.1% increase for out-of-home consumption, while at-home consumption recovered 1.1% compared to July 2023 levels.

A closer look at food price trends shows that three of the six main groups saw a price increase during the month, while the other three saw a price decrease in July. The index for meat, poultry, fish and eggs rose by 0.7%, led by a 5.5% price increase for eggs. The index for fruits and vegetables rose by 0.8%, while the price increase for soft drinks was 0.5%.

The energy index was unchanged in July after falling 2% in June. Gasoline prices were also unchanged in July, while heating oil and electricity rose 0.9% and 0.1% respectively. At the other end of the spectrum, gas prices fell 0.7%.

Over the past 12 months, energy prices have risen by an average of 1.1%, with electricity rising by 4.9% and gas by 1.5%. The gasoline index has fallen by 2.2% since July 2023 and heating oil has fallen by 0.3% over the same period.