An article summarized by Morningstar:
Inflation remained elevated in July, but showed a slight improvement from June. The Consumer Price Index (CPI) rose 3.4% year over year, down from 3.5% in June, while core CPI, which excludes food and energy, increased 2.5%, compared with 2.6% the previous month. On a monthly basis, overall CPI rose 0.1%, while core CPI increased 0.2%, both matching economists’ expectations.
Food prices increased 0.1% in July, with grocery prices falling 0.1% while restaurant prices climbed 0.3%. Energy prices were a major source of downward pressure, falling 1.5% as gasoline prices dropped 2.9%. Shelter costs, meanwhile, increased 0.1%, the same pace as in June.
The CPI is one of the most closely watched measures of inflation because it tracks price changes across everyday expenses including housing, food, healthcare and energy. While investors closely follow CPI, the Federal Reserve primarily uses the Personal Consumption Expenditures (PCE) price index when setting interest-rate policy and targets 2% inflation. The July report suggests inflation is still above the Fed’s target, but continues to gradually cool.
