According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate was 2.9 % – rate of year-over-year growth up 0.2 % from last month. The year-over-year core inflation (excludes energy and food) rate increased from 2.3 % to 2.4 %, and continues to be above the target set by the Federal Reserve.

Analyst Opinion of the Consumer Price Index

Fuel oil and used cars were the main driver for year-over-year inflation. Core inflation is now above 2.0 % year-over-year.

The market expected (from Nasdaq / Econoday):

  Consensus Range Consensus Actual CPI-U – month-over-month (MoM) 0.1 % to 0.2 % +0.2 % +0.2 % CPI-U year-over-year (YoY) 2.9 % to 3.0 % +2.9 % +2.9 % CPI less food & energy (MoM) 0.2 % to 0.3 % +0.2 % +0.2 % CPI less food & energy (YoY) 2.2 % to 2.5 % +2.3 % +2.4 %

As a generalization – inflation accelerates as the economy heats up, while inflation rate falling could be an indicator that the economy is cooling. However, inflation does not correlate well to the economy – and cannot be used as an economic indicator.

The major influence on the CPI was shelter, gasoline, and food.

The index for shelter rose 0.3 percent in July and accounted for nearly 60 percent of the seasonally adjusted monthly increase in the all items index. The food index rose slightly in July, with major grocery store food group indexes mixed. The energy index fell 0.5 percent, as all the major component indexes declined. The index for all items less food and energy rose 0.2 percent in July, the same increase as in May and June. Along with the shelter index, the indexes for used cars and trucks, airline fares, new vehicles, household furnishings and operations, and recreation all increased. The indexes for medical care and for apparel both declined in July. The all items index rose 2.9 percent for the 12 months ending July, the same increase as for the period ending June. The index for all items less food and energy rose 2.4 percent for the 12 months ending July; this was the largest 12-month increase since the period ending September 2008. The food index increased 1.4 percent over the last 12 months, and the energy index rose 12.1 percent.

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