Consumer prices up 2.9 pct, leaving Americans worse off

U.S. Consumer Prices Rose 0.2% in July

On a year-on-year basis, the headline inflation remained unchanged at 2.9 percent, while the core rate rose to 2.4 percent, reaching its highest level since September 2008. Overall, the so-called shelter index rose 3.5 per cent in the 12 months through July.

About 60 per cent of the increase in the overall index came from a jump in shelter costs.

Excluding food and energy prices, the core consumer price index also edged up by 0.2 percent in July, matching the increases seen in the two previous months as well as expectations.

Keeping inflation in check is the job of the Federal Reserve, the central bank system of the U.S. It tries to do that by raising interest rates, which makes it more expensive to borrow money and tends to cool economic activity.

The U.S. central bank has raised rates twice this year, in March and June, and financial markets overwhelmingly expect a hike at the next policy meeting in September. The CPI rose 0.1 per cent in June.

Healthcare costs fell 0.2 percent after gaining 0.4 percent in June.

Some items that posted big declines in June reversed course in July.

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Apparel decreased again, dropping 0.3 per cent after falling 0.9 per cent the prior month.

The core reading brought the three-month annualized gain to 2.3 percent, after rising 1.7 percent in June.

By making it more expensive to borrow, the Fed would likely tamp down on inflation as well as economic growth, making it more hard for President Donald Trump to achieve the sustained 3 percent gains in gross domestic product that he has promised voters. That gauge hit the United States central bank's 2 per cent target in March for the first time in more than six years, and Fed policymakers have said that they will not be unduly concerned if it overshoots its target in the coming months.

The data showed that prices were rising a little faster than wages, leaving the buying power of paychecks one-tenth of a percentage point lower today than a year ago, despite an otherwise healthy economy.

The results indicate steady consumer demand will sustain inflation, at a time tariffs and counter-levies by the USA and nations including China also threaten to lift costs on a range of goods. A list of Chinese products set to be hit with tariffs next month includes consumer items such as digital cameras, selfie sticks and electric scooters. Gas costs have surged 25.4 percent in the past year, but they tumbled 0.6 percent in July, which could mean that prices at the pump may be stabilizing.

The consumer price index is the broadest of three price gauges from the Labor Department because it includes all goods and services. This article is strictly for informational purposes only.

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