“Through the noise, I see an inflation story that is certainly not solved, but it’s improving.”
Senior economist at Wells Fargo, Michael Pugliese, on the Consumer Price Index (CPI) report for July; the CPI report provides an important read on inflation.
aug 10, 2023
Why It Matters: The Consumer Price Index (CPI) measures a mixed basket of costs of goods and services in the United States, and is used as an important gauge of inflation (high inflation = your dollar buys you less). Prices in July were 3.2% higher than July 2022, and 0.2% higher than June. Core inflation ("core CPI") – which is seen as a better gauge of inflation because the measure strips out food and energy prices, which can be volatile – showed prices increasing 4.7% over the past year, marking the lowest reading of core inflation since October 2021.
Important Context: CNBC explains, "Together, the latest batch of data shows that while inflation has come well off its 40-year highs of mid-2022, it is still considerably above the 2% level where the Federal Reserve would like to see it and high enough that cuts in interest rates are unlikely anytime soon."
More Details: The cost of shelter (rent, housing) was the largest contributor to price increases in July, with the report explaining that shelter prices account "for over 90 percent of the increase." The price of motor vehicle insurance was also a large contributing factor.