Inflation as measured by the consumer price index rose 0.1% from June to July, the Bureau of Labor Statistics said Wednesday, showing that costs broadly remained elevated for consumers amid volatile energy prices.
From a year ago, inflation dropped slightly to 3.4% from 3.5%.
But in a troubling sign for consumers, it remains above the rate of wage growth, which as of last month was pacing at 3.2%, according to the BLS. Average hourly earnings slipped 0.2% from a year earlier, as well, the agency said Wednesday.
Inflation has been wiping out wage gains for the past four months, Heather Long, chief economist at Navy Federal Credit Union, wrote on X.
“For middle-income and lower-income Americans, this is the key issue,” Long wrote. “There will likely be some belt-tightening ahead.”
Energy prices, which are the primary cause of inflation’s spike this year, have moved higher as the war with Iran shows no sign of ending soon.
Gasoline prices in Wednesday’s report showed a 2.9% decline during the month, although that is likely in the rearview mirror now. The price of electricity was nearly unchanged month over month, rising 0.1%.
Brent crude oil hit $90 earlier Wednesday morning, while U.S. crude oil rose to almost $84 per barrel. The national regular gas price average also rose Wednesday, once again hitting $4.03 per gallon.
The report showed that the price of medical care, airline fares, communication, education and recreation all increased in the month. However, the cost of motor vehicle insurance was “among the major indexes that decreased,” the BLS said.
The BLS also said that shelter costs rose 0.1% in July, “accounting for roughly two-thirds of the monthly all items increase.” The “index for food also increased 0.1% over the month, as the index for food away from home increased 0.3%,” it said. That index measures the cost to eat out or purchase takeaway food.
Even before Wednesday’s figures, some notable Federal Reserve officials were already calling for a rate hike. The Fed has kept rates unchanged since the United States and Israel launched the Iran war, even as other central banks in Europe and Japan have raised rates.
“Now is the time to act,” Cleveland Fed President Beth Hammack wrote Tuesday on LinkedIn. “The longer we wait to take action to bring inflation back to our 2 percent objective, the more challenging it will be to bring it back down and the more expensive it will be for the American people,” she added.
Economists and analysts are split over whether a hike is coming, though.
“Overall, this data supports our view that the Fed will remain on hold in the near term,” said Truist head of U.S. economics Mike Skordeles.
Still, he noted, there is a lot of data to come, including jobs and CPI reports for August, before the Fed’s next rate decision in mid-September.
