Inflation Stays Tame But Household Budgets Get No Break

Inflation remains steady, but for many households living paycheck to paycheck, there is little relief. The July Consumer Price Index (CPI) rose 0.2%, slowing slightly from June’s 0.3%. Over the past 12 months, inflation remains steady at 2.7%. These figures broadly met economists’ expectations.

Core Inflation Sees Biggest Rise This Year

The “core” inflation measure, which excludes food and energy prices, rose 0.3% in July—the largest monthly increase since January. Year over year, core inflation increased to 3.1%, up from 2.9% in June. Other categories, excluding food, shelter, and energy, climbed 0.4% last month and 2.5% over the past year—the highest since July 2023. Shelter costs rose 0.2%, still the main factor in the overall increase, but its growth pace has slowed to the lowest level since 2021.

Mixed Trends in Food Prices

Food prices showed a varied picture in July. Overall food prices were unchanged after two months of increases. Prices for food at home fell 0.1%, while dairy products rose 0.7%, ending a three-month decline. Meat, poultry, fish, and eggs increased slightly by 0.2%, breaking a recent downward trend. Meanwhile, prices for dining out rose 0.3%, with full-service meals up 0.5% and limited-service meals increasing 0.1%. Over the past year, dining out costs have climbed 3.9%.

Tariffs Continue to Impact Prices

Tariffs continue to push prices higher in key areas. Personal care products rose 0.4%, furniture and bedding increased 0.9%, marking their highest yearly rise since December 2022. Motor vehicle parts prices also rose 0.9% in July and are up 2.9% over the past year. Meanwhile, appliance prices dropped 0.9% in July, now slightly below last year’s levels. Apparel prices edged up 0.1% but remain below year-ago levels.

Data Collection Challenges

It’s important to note some data collection was temporarily suspended in parts of Nebraska, New York, and Utah, affecting about 15% of samples. The Bureau of Labor Statistics stated this had minimal impact on the overall CPI figures, though it may have increased volatility in some item categories.

No Time to Relax

While the inflation data may bring some market optimism, wage growth is slowing. PYMNTS Intelligence reports more than two-thirds of Americans live paycheck to paycheck, with many struggling to cover bills. Inflation remains a pressing concern, and household budgets continue to feel the pressure.

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