US consumer prices rose in July but at slower pace
WASHINGTON – Prices for U.S. consumers rose last month but at the slowest pace since February, a sign that Americans may gain some relief after four months of sharp increases that have imposed a burden on households.
Wednesday’s report from the Labor Department showed that consumer prices jumped 0.5% from June to July, down from the previous monthly increase of 0.9%. They have increased a substantial 5.4%, though, compared with a year earlier.
Excluding volatile energy and food prices, so-called core inflation rose 4.3% in the past year, down slightly from 4.5% in June – the fastest pace since 1991.
Americans continue to face higher costs, with the year-over-year inflation rate matching June’s increase as the largest annual jump since 2008. At the same time, some recent drivers of the inflation surge slowed last month. The price of used cars, which had soared over the past three months, ticked up just 0.2% in July. Airline fares, which had been spiking, actually declined 0.1% in July.
Rising inflation has emerged as the Achilles’ heel of the recovery, erasing much of the benefit to workers from higher pay and heightening pressure on the Federal Reserve’s policymakers under Chair Jerome Powell, who face a mandate to maintain stable prices.
Inflation is also threatening to become a political liability for President Joe Biden, whom Republicans in Congress have blamed for contributing to accelerating inflation from having pushed through a $1.9 trillion financial aid package last spring that included stimulus checks to most households and federal supplemental unemployment aid. Further trillions in spending, backed by Biden and congressional Democrats, will be considered by Congress in the coming weeks.
In response, Powell and the White House have said they believe that the pickup in inflation, which exceeds the Fed’s 2% annual target, will prove temporary because it stems mainly from supply shortages resulting from the sudden shutdown – and swift reopening – of a $20 trillion economy.