Inflation rose 3.2% in July as prices tick higher for first time in a year

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Strategic Wealth Partners investment strategist Luke Lloyd on what to expect from the July PPI and discusses 2Q earnings. 

Inflation ticked higher in July, snapping a yearlong streak of steady declines in prices as consumers continued to grapple with the rising cost of everyday goods.

The Labor Department said Thursday that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries and rents, rose 0.2% in July from the previous month, in line with estimates. 

Prices climbed 3.2% from the same time last year, up from 3% in June but slightly below the 3.3% forecast from Refinitiv economists. It marked the first acceleration in the headline figure in more than a year, underscoring the challenge in taming high inflation.

«The Fed has always stressed it would take a long time to tame inflation, and today’s data illustrates their point,» said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. «The CPI didn’t show any signs of reaccelerating inflation, but it didn’t mark a dramatic dropoff, either.»

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Other parts of the report also pointed to a slower retreat for inflation. Core prices, which exclude the more volatile measurements of food and energy, climbed 0.2%, or 4.7% annually. Both of those figures are in line with expectations. However, core prices remain more than two times higher than the typical pre-pandemic level. 

Stocks jumped after the report fueled investors' hopes that the Fed will soon conclude its tightening campaign, with all three of the major U.S. benchmarks rising.

Scorching-hot inflation has created severe financial pressures for most U.S. households,