WASHINGTON – The seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U) last month rose 0.1 percent, its smallest gain in eight months and half June’s 0.2-percent increase, according to a report today from the U.S. Bureau of Labor Statistics.
The CPI’s increase – the smallest in eight months – matched the median forecast of 77 economists surveyed by Bloomberg News. Their estimates ranged from a decline of 0.3 percent to an increase of 0.4 percent.
The energy index dipped 1.0 percent, in its second monthly decline, led by a 1.4-percent decrease in petroleum costs. Transportation costs were down 0.3 percent and recreation costs 0.1 percent.
Food and beverage costs edged up 0.3 percent, slowing from June’s 0.5-percent gain. Medical costs rose 0.6 percent; apparel prices were up 0.4 percent; and housing and education/communication costs both rose 0.2 percent.
The core CPI excluding food and energy – the Federal Reserve’s preferred inflation measure – edged up 0.2 percent in July, matching both analysts’ expectations and the previous month’s gain.
Compared with a year ago, the CPI rose 2.3 percent to 208.299 points (1992-1994 = 100), while the core index rose 2.2 percent, the BLS said. For the first seven months of the year, the CPI has risen at an annual rate of 4.5 percent, while core prices have risen at a rate of 2.3 percent.
The figures give the Fed scope to reduce interest rates if the economy weakens, analysts told Bloomberg News.
“The economy is still performing well,” Michael Moran, chief economist at Daiwa Securities America Inc. in New York, told Bloomberg. “Manufacturing is brisk” – U.S. industrial production rose 3 percent in July, the Fed said in a report today – “and there is not much upward pressure on inflation. If the financial markets weren't in turmoil, the Fed would be solidly on hold.”
Meanwhile, American workers’ real average weekly earnings (adjusted for inflation) fell 0.1 percent in July, the BLS said in a separate report. The month’s 0.3-percent increases in both average hourly earnings was more than offset by a 0.3-percent decrease in average weekly hours and a 0.1-percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Compared with July 2006, real earnings increased 3.6 percent. Before adjustment for seasonal changes and inflation, weekly earnings averaged $595.76 last month compared with $572.85 a year earlier.
Additional information, including the 19-page Consumer Price Index report, is available from the U.S. Department of Labor’s Bureau of Labor Statistics at www.bls.gov/cpi; the five-page Real Earnings report can be found at www.bls.gov/ces.
