July inflation climbed 8.5 percent over the past year, easing slightly thanks to falling gas and energy prices and raising new hopes that inflation will continue to simmer down.
In one of the most encouraging signs in more than a year, inflation in July was also flat from the month before, as a major drop-off in gasoline prices helped offset increases in food and shelter. Officials have been closely scrutinizing the inflation picture each month, and the latest inflation report offered fresh hope that overall prices might be moving in the right direction after months of gains. The latest figures marked the lowest month-to-month inflation reading since May 2020.
“These kind of swings should be a reminder of how far our economy is right now from some semblance of normal,” said Claudia Sahm, founder of Sahm Consulting and former Federal Reserve economist. “We should take a deep breath today, but not do a victory dance.”
June’s inflation report was bleak, notching a new pandemic peak of 9.1 percent over the year before, as prices at the pump averaged above $5 per gallon. But by July, families felt more relief in their gas and energy bills. The gasoline index fell 7.7 percent in July, and the energy index fell 4.6 percent over the month. Airfares also fell at a sharp 7.8 percent, and prices for used cars also dipped slightly.
Policymakers within the Biden administration and Federal Reserve routinely hold back from drawing too much from one month of data. Jared Bernstein, a member of the White House’s Council of Economic Advisers, said that despite the ongoing uncertainty, American families got a bit of a respite in July. Last month, real average hourly earnings increased 0.5 percent from June. The job market also grew gangbusters.
“It’s no ‘mission accomplished,’ but some much-needed breathing room,” Bernstein told The Post. “When it comes to energy, the president’s release of barrels from the Strategic Reserve are one of the factors playing a role in that now persistent decline.”
Grocery and housing costs continue to strain peoples’ budgets — and will also need to see months of steady declines for overall inflation to get closer to more normal levels. The food index continued to creep up, rising 1.1 percent over the month. Bread was up 2.8 percent over the month, and chicken 1.4 percent. Canned vegetables were up 1.5 percent.
Rent was also up 0.7 percent over the month, as housing boils over into an economic crisis for tenants nationwide. All told, shelter index rose 5.7 percent over the last year, accounting for about 40 percent of the total increase in all items, discounting food and energy.
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