U.S. Consumer Price Growth Accelerates In July
(RTTNews) - Consumer prices in the U.S. rose in line with economist estimates in the month of July, according to a report released by the Labor Department on Tuesday, although the report also showed another bigger than expected increase in core consumer prices.
The Labor Department said its consumer price index climbed by 0.3 percent in July after inching up by 0.1 percent in both May and June. Economists had expected prices to rise by 0.3 percent.
The faster price growth was partly due to a significant rebound in energy prices, which surged up by 1.3 percent in July after plunging by 2.3 percent in June.
Meanwhile, food prices were unchanged for the second month in a row, as a decline in the food at home index was offset by an increase in the food away from home index.
Excluding food and energy prices, core consumer prices rose by 0.3 percent for the second consecutive month, while economists had expected a 0.2 percent uptick.
The Labor Department said the increase was broad-based, reflecting higher prices for shelter, medical care, airline fares, household furnishings and operations, apparel, and personal care.
Andrew Hunter, Senior U.S. Economist at Capital Economics, said the bigger than expected increase in core prices "suggests that underlying inflationary pressures may not be as subdued as is widely assumed."
"Provided that the incoming activity data continue to deteriorate, however, the Fed still looks likely to cut interest rates again next month," Hunter said.
Compared to the same month a year ago, consumer prices in July were up by 1.8 percent, reflecting an acceleration from the 1.6 percent increase in June.
The annual rate of core consumer price growth also accelerated to 2.2 percent in July from 2.1 percent in June. Prices for shelter and medical care showed significant year-over-year growth.
Last Friday, the Labor Department released a separate report showing a modest increase in U.S. producer prices in the month of July.
The Labor Department said its producer price index for final demand rose by 0.2 percent in July after inching up by 0.1 percent in both May and June. The uptick in prices matched economist estimates.
Meanwhile, the report said core producer prices, which exclude food and energy prices, edged down by 0.1 percent in July after rising by 0.3 percent in June.
The modest pullback in core producer prices came as a surprise to economists, who had expected core prices to rise by 0.2 percent.
Compared to the same month a year ago, producer prices in July were up by 1.7 percent, unchanged from the annual rate of growth seen in the previous month.
On the other hand, the report said the annual rate of growth in core consumer prices slowed to 2.1 percent in July from 2.3 percent in June.
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