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Consumer prices rose by 3.2% annually in July, picking up for the first time in 13 months

(Qnnflash) – Consumer price increases have picked up pace on an annual basis for the first time in over a year. The Consumer Price Index (CPI) rose by 3.2% year-over-year through July, up from June’s 3% annual increase, according to data from the Bureau of Labor Statistics. While this annual increase was slightly below economists’ expectations of a 3.3% gain, the monthly prices rose by 0.2%. This increase was driven by rising shelter costs, which accounted for the majority of the upward movement. Despite the uptick in the headline number, the report showed that underlying inflation continued to cool, with core CPI (excluding food and energy) rising 0.2% from June and 4.7% year-over-year.

The July report indicated a decline in inflation in various sectors, including used car prices and airfares, helping to lower core CPI. The continued cooling of inflation has led to discussions about whether this upward movement signifies a return to the high inflation rates seen previously. Experts suggest that there may be relief in terms of inflation estimates, particularly for rents and vehicle costs. The shelter component of CPI, a lagging indicator of rents, is expected to show a contraction in the coming months. The Federal Reserve has been monitoring services inflation, particularly costs influenced by labor, which has a greater potential to be “sticky” due to slower reductions in labor costs. While prices are still elevated compared to a year ago, they have calmed down, allowing for real wage gains to occur.

Consumer spending, a crucial driver of the economy, has been impacted by inflation, high interest rates, and growing debt levels. Large corporate bankruptcies could also contribute to economic challenges ahead.

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