Inflation ticked higher in July, snapping a year-long streak of steady declines in prices as consumers continued to grapple with the rising cost of everyday goods.
The Labor Department said Thursday that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries and rents, rose 0.2% in July from the previous month, in line with estimates.
Prices climbed 3.2% from the same time last year, up from 3% in June but slightly below the 3.3% forecast from Refinitiv economists. It marked the first acceleration in the headline figure in more than a year, underscoring the challenge in taming high inflation.
“The Fed has always stressed it would take a long time to tame inflation, and today’s data illustrates their point,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. “The CPI didn’t show any signs of reaccelerating inflation, but it didn’t mark a dramatic drop-off, either.”
Other parts of the report also pointed to a slower retreat for inflation. Core prices, which exclude the more volatile measurements of food and energy, climbed 0.2%, or 4.7% annually. Both of those figures are in line with expectations. However, core prices remain well above the Federal Reserve’s 2% target for inflation.
Stocks jumped after the report fueled investors’ hopes that the Fed will soon conclude its tightening campaign, with all three of the major U.S. benchmarks rising.
Scorching-hot inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily affected by price fluctuations.
Consumers continued to see some reprieve in July. The price of used cars and trucks tumbled 1.3% over the month and are down 5.6% compared with the same time one year ago. Airline tickets also plummeted 8.1% in July, following declines in both April, May and June.
Other price gains proved persistent and stubbornly high in June. Shelter costs, which account for about 40% of the core inflation increase, rose 0.4% for the month and are up 7.7% over the past year. Energy prices also increase 0.1% last month, including a 0.2% uptick in gasoline costs. Gas prices are down about 19.9% compared with the same time last year, when the average cost for a gallon of regular was running around $4.01.
Food prices, a visceral reminder of inflation for many Americans, also inched higher in July. Grocery costs rose 0.3% last month and are up 3.6% compared with the same time last year.
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