US consumer price growth unchanged for July
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US consumer prices did not rise in July due to a sharp drop in the cost of petrol, delivering the first notable sign of relief for Americans who have watched inflation climb over the past 2 years.
The Consumer Price Index (CPI) was unchanged last month after advancing 1.3 per cent in June, the Labor Department said on Wednesday (Aug 10) in a closely watched report that nevertheless showed underlying inflation pressures remain elevated as the Federal Reserve mulls whether to embrace another super-sized interest rate hike in September.
Economists polled by Reuters had forecast a 0.2 per cent rise in monthly CPI in July on the heels of a roughly 20 per cent drop in the cost of petrol. Prices at the pump spiked in the first half of this year due to the war in Ukraine, hitting a record-high average of more than US$5 per gallon in mid-June, according to motorist advocacy group AAA.
But the Fed has indicated that several monthly declines in CPI growth will be needed before it lets up on the increasingly aggressive monetary policy tightening it has delivered to tame inflation currently running at 4-decade highs.
US consumer prices have been surging due to a number of factors, including snarled global supply chains, massive government stimulus early in the Covid-19 pandemic and Russia's invasion of Ukraine.
Food is one component of the CPI that remained elevated in July, rising 1.1 per cent last month after climbing 1.0 per cent in June.
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In the 12 months through July, the CPI increased by a weaker-than-expected 8.5 per cent following a 9.1 per cent rise in June. Underlying inflation pressures, which exclude volatile food and energy components, also showed some encouraging signs.
The so-called core CPI rose 0.3 per cent in July after climbing 0.7 per cent in June, but increased 5.9 per cent in the 12 months through July, the same pace as in June.
Inflation in the cost of rent and owners' equivalent rent of primary residence, which is what a homeowner would receive from renting a home, held almost steady last month. Shelter costs comprise about 40 per cent of the core CPI measure. REUTERS
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