Inflation’s expected to have increased slightly in July, interrupting a streak that saw price hikes steadily waning and sending a signal that inflation may be slower to cool down the rest of the year.
Economists are forecasting that last month, overall consumer prices rose 3.2% from a year earlier and ticked up 0.2% from June.
That’s still a sharp slowdown from the 9.1% inflation rate in June 2022, which was the highest in four decades. But the July rate may mark a plateau, with Barclays expecting annual inflation to remain at 3.2% at the end of the year – above the 2% target the Federal Reserve says would indicate prices have stabilized.
CPI report today
The Labor Department will release the CPI at 8:30 AM ET on Thursday, Aug. 10.
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Inflation data today
Annual inflation was 3% in June, dropping from 4% the previous month and down dramatically from 9.1% in June 2022 – the highest rate in forty years. The most recent uptick was the slimmest rise in inflation since March 2021. The smaller bump in overall prices was largely the result of a steep decline in energy costs – though they increased month over month – and food prices that were still rising but at a slower pace.
The June rate was good news for consumers buying certain products, but remained higher than the 2% target sought by the Federal Reserve which has been aggressively raising interest rates to calm inflation.
Why is CPI important?
The Federal Reserve decides whether to raise, lower or leave interest rates where they are based on achieving its twin goals of price stability and maximum employment. The CPI is a key measure the Fed uses to determine if prices are “stable.”
“CPI probably gets more press, in that it is used to adjust social security payments and is also the reference rate for some financial contracts,” the Cleveland Fed said.
In July, the Federal Reserve boosted its key interest rate by a quarter point to a range of 5.25% to 5.5%, the highest level in 22 years. It indicated another increase is a possibility even though inflation has been waning and is far below the four-decade peak it reached in June, 2022.
The Fed’s next meeting will be September 19 and 20th.
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