US inflation records first increase in 13 months as July CPI edges up to 3.2%
The Federal Reserve
The US Bureau of Labor Statistics reported today (10 August) that core inflation, which excludes food and energy prices, rose 4.7% over the last year, down from 4.8% last month.
Despite June's surprise drop in the rate of inflation to 3%, markets expect inflation to struggle to reach the 2% target set by the Federal Reserve.
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The largest contributor to rising prices «by far» throughout the month was shelter, the BLS said, contributing to over 90% of the increase, while the index for motor vehicle insurance also contributed.
Shelter prices have risen 7.7% over the last year, with prices increasing throughout July by 0.4%.
«Several indices declined in July, led by the airline fares index, which fell 8.1% over the month, its fourth consecutive monthly decline,» the BLS said.
«The index for used cars and trucks fell 1.3% in July, after decreasing 0.5% in June.»
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Richard Flynn, managing director at Charles Schwab UK, said: «Today's rise in the rate of inflation will likely concern investors. Last week's jobs report shows that unemployment remains low, but while this indicator underscores the strength of the economy, Federal Reserve officials keep pointing to the potential problems of a tight labour market and inflation that hasn't yet fallen back to the central bank's 2% target.
»If wage and/or inflation metrics prove stubborn in their downward trend, it could force the Fed to be more aggressive with monetary policy. We expect that a peak in the rate-hiking cycle is near and that yields will decline over the long run, but there is still a bumpy road ahead."
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