Your Wallet Is Feeling the Pain: Inflation Hits 3.2% in July

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Your Wallet Is Feeling the Pain: Inflation Hits 3.2% in July
Your Wallet Is Feeling the Pain: Inflation Hits 3.2% in July

The Consumer Price Index (CPI) rose 0.6% in July, after rising 0.5% in June. The annual rate of inflation rose to 3.2%, the highest rate since February 2018.

The increase in the CPI was driven by higher prices for energy, food, and shelter. Energy prices rose 2.7% in July, the largest monthly increase since March 2011. Food prices rose 0.7%, the largest monthly increase since April 2019. Shelter prices rose 0.5%, the largest monthly increase since October 2018.

Core inflation, which excludes food and energy prices, rose 0.4% in July, the same as in June. The annual rate of core inflation rose to 2.7%, the highest rate since February 2018.

The increase in inflation is likely to put pressure on the Federal Reserve to raise interest rates sooner than expected. The Fed is currently targeting an inflation rate of 2%. However, with inflation running above 3%, the Fed may need to raise interest rates in order to cool the economy and bring inflation under control.

The following are some of the key takeaways from the CPI report:

  • Inflation is rising at its fastest pace in years.
  • The increase in inflation is being driven by higher prices for energy, food, and shelter.
  • Core inflation is also rising but at a slower pace than headline inflation.
  • The increase in inflation is likely to put pressure on the Fed to raise interest rates.

Here are some additional details from the CPI report:

  • The energy index rose 2.7% in July, the largest monthly increase since March 2011. The gasoline index rose 3.9%, the largest monthly increase since November 2018.
  • The food index rose 0.7% in July, the largest monthly increase since April 2019. The food-at-home index rose 0.6%, the largest monthly increase since July 2018.
  • The shelter index rose 0.5% in July, the largest monthly increase since October 2018. The rent index rose 0.4%, the largest monthly increase since January 2019.
  • The core index rose 0.4% in July, the same as in June. The core food index rose 0.3%, the largest monthly increase since March 2019.
  • The core shelter index rose 0.2%, the largest monthly increase since October 2018.

The CPI report is a reminder that inflation is a real concern for American households. The increase in inflation is eating away at the purchasing power of consumers and making it more difficult to make ends meet. The Fed will need to carefully monitor inflation and take action to cool the economy if inflation continues to rise.

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