Consumer prices up 0.2% in July, USA

Consumer prices rose moderately in July, according to the Bureau of Labor Statistics (BLS), mainly because medical care services, cars and food saw minimal increases.

However, earnings have not managed to keep pace with inflation.

The July consumer price index was lower than 0.5% in June, which was unusually high because of a jump in fuel prices.

Hourly wages, when adjusted for inflation, dropped 0.2% in July, according to BLS data.

Hourly wages have failed to keep up with consumer prices for three straight months.

The annual rate of ”Core inflation” stood at 1.7% in July, which is close to the central bank’s 2% target, allaying fears of disinflation.

”Core inflation” represents the long run trend in the price level. When calculating core inflation, the BLS excludes items which are subject to volatile prices, such as energy and food.

Consumer prices set to rise moderately this year

Economists are predicting moderate inflation for the rest of the year. Supplies of commodities have improved and healthy food crops are expected during the fall.

The average prices for used trucks and cars went down by 2.1% in July, compared to the same month in 2012.

The price of new cars rose by 1.2% in July, compared to 12 months before.

Percent changes in CPI (Consumer Price Index) for All Urban Consumers (CPI-U): U.S. city average

Seasonally adjusted changes from preceding month
                                                                          Un-  
                                                                       adjusted
                                                                        12-mos.
                              Jan.  Feb.  Mar.  Apr.  May   June  July   ended 
                              2013  2013  2013  2013  2013  2013  2013   July  
                                                                         2013  

 All items..................    .0    .7   -.2   -.4    .1    .5    .2      2.0
  Food......................    .0    .1    .0    .2   -.1    .2    .1      1.4
   Food at home.............    .0    .1   -.1    .1   -.3    .2    .1      1.0
   Food away from home (1)..    .1    .1    .2    .3    .2    .2    .2      2.1
  Energy....................  -1.7   5.4  -2.6  -4.3    .4   3.4    .2      4.7
   Energy commodities.......  -3.0   8.6  -4.1  -7.9   -.1   5.7   1.0      5.0
    Gasoline (all types)....  -3.0   9.1  -4.4  -8.1    .0   6.3   1.0      5.2
    Fuel oil (1)............   -.2   3.1  -2.1  -4.4  -2.9   -.5   1.1      3.4
   Energy services..........    .4    .5   -.2   1.4   1.2    .1  -1.0      4.3
    Electricity.............   1.1    .3   -.6    .5    .8    .2   -.3      3.1
    Utility (piped) gas                                                        
       service..............  -1.7   1.2   1.0   4.4   2.4   -.4  -2.8      8.8
  All items less food and                                                      
     energy.................    .3    .2    .1    .1    .2    .2    .2      1.7
   Commodities less food and                                                   
      energy commodities....    .2    .0   -.1    .0    .0    .2    .0      -.2
    New vehicles............    .1   -.3    .1    .3    .0    .3    .1      1.2
    Used cars and trucks....    .2    .8   1.2    .6   -.1   -.4   -.4     -2.1
    Apparel.................    .8   -.1  -1.0   -.3    .2    .9    .6      1.6
    Medical care commodities    .1   -.4    .1    .1   -.5    .5    .4      -.1
   Services less energy                                                        
      services..............    .3    .2    .2    .1    .2    .2    .2      2.4
    Shelter.................    .2    .2    .2    .2    .3    .2    .2      2.3
    Transportation services     .5    .1    .2   -.2    .4   -.1    .4      3.0
    Medical care services...    .2    .3    .3   -.1    .0    .4    .1      2.6
(Source: Bureau of Labor Statistics)
   1 Not seasonally adjusted.

Earlier this month, the US Department of Labor announced that the American economy added 162,000 jobs, bringing the unemployment rate down to 7.4%.

The Wall St. Journal quoted Paul Dales, senior U.S. economist for Capital Economics, as saying “The fading of the downward pressure on core inflation and the fall in initial jobless claims to a six-year low mean that the odds on the Fed beginning to taper next month have shortened further.”

Before reducing their bond-buying program, which stands at $85 billion per month, Fed officials say they want to see consumer prices rising more, as well as other indicators of a stronger economy.

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