United States Inflation July 2019

United States

United States: Headline inflation strengthens in July

August 13, 2019

Consumer prices rose 0.3% over the prior month in July, up from the 0.1% increase registered in June. The print was driven by a rebound in energy prices on the back of a sharp recovery in gasoline prices; higher medical care costs; pricier transportation costs; and steady housing price pressures. Conversely, prices for food were unchanged in the month, while apparel prices rose at a softer rate in July. Core consumer prices—which exclude volatile items such as food and energy—also rose 0.3% in July, matching June’s increase and marking the strongest back-to-back price gains since the early 2000s.

Inflation edged up to 1.8% in July from 1.6% in June, overshooting market expectations of 1.7%, on rising underlying price pressures, with core inflation inching up to 2.2% in July from 2.1% in June. The core personal consumption expenditures price index—a separate gauge that is closely monitored by the Fed—ticked up to 1.6% in June, the last month for which data is available, remaining below the Bank’s 2.0% target.

Remarking on the implications of stronger core price pressures on the Fed’s deliberations, Leslie Preston, senior economist at TD Economics, noted:

“After years of underperforming their target, core inflation is likely not hot enough yet to have the Fed too concerned. Given the latest escalation in the China-U.S. trade war we still expect the Fed to make another insurance rate cut in September. However, today's data is a reminder that inflation is not dead and suggests that the Fed may not cut as much in the months ahead as markets currently expect.”

FocusEconomics Consensus Forecast participants expect inflation to average 1.9% in 2019, which is unchanged from last month’s forecast. For 2020, the panel expects inflation to average 2.1%.


Author:, Economist

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United States Inflation July 2019

Note: Year-on-year and month-on-month variation of seasonally-adjusted consumer price index in %.
Source: Bureau of Labor Statistics.


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