No Monthly Inflation Says July CPI

The Consumer Price Index had no change for July.  Food inflation was a big fat zero and energy costs dropped another -1.6% for the month.  Inflation with food and energy price changes removed increased 0.1% with shelter and medical costs once again driving the increase.  From a year ago overall CPI has risen 0.8%.  Without energy and food considered, prices have increased 2.2% for the year.   CPI measures inflation, or price increases.



Yearly overall inflation is shown in the below graph.


CPI year ago change


Core inflation, or CPI with all food and energy items removed from the index, has increased 2.2% for the last year.  For the past decade the annualized inflation rate has been 1.9%.  In contrast to overall inflation, this is the figure the Federal Reserve considers when considering raising interest rates.



Core CPI's monthly percentage change is graphed below.  This month core inflation increased 0.1%.  Within core inflation, shelter increased 0.2%, with monthly rental costs increasing 0.3% and home ownership increased 0.3%.  Motels and hotels dropped -2.7% for the month.  Used cars and trucks dropped -1.0%.  Car insurance increased 0.4% for the month and had risen for nine months in a row.  New vehicles increased 0.2%, the first rise in costs since February.


core cpi


The energy index is down -10.9% from a year ago.   The BLS separates out all energy costs and puts them together into one index.  For the year, gasoline has declined --19.9%, while fuel oil has dropped -17.8%.  Graphed below is the overall CPI energy index.


CPI energy index


Graphed below is the CPI gasoline index and for the month of July, gasoline prices dropped -4.7%.


CPI Gasoline


Core inflation's components include shelter, transportation, medical care and anything that is not food or energy.  The shelter index is comprised of rent, the equivalent cost of owning a home, hotels and motels.   Shelter increased 0.2% and is up 3.3% for the year, yet rent is outpacing homeownership costs.  Rent of a primary residence just keeps soaring and this month by 0.3% and is up 3.8% for the year.  Graphed below is the rent price index.


cpi rent


Food prices had no change for the month.  Food and beverages have now increased just 0.2% from a year ago, which is the smallest annual increase since March 2010.  Groceries, (called food at home by the BLS), slid another -0.2% for the month, and are down -1.6% for the year.  This is the 7th decline in 9 months for groceries.  Meats, eggs & fish lead the decrease with a -0.6% monthly drop and an annual -5.6% decline.  Dairy dropped -0.4% for the month and is down -3.1% for the year.  Herds were culled last year as the drought's impact took it's toll.   Eating out, or food away from home increased 0.2% for the month and is up 2.8% for the year.


CPI food index change


Graphed below are grocery prices, otherwise known as the food at home index.


food at home


Medical care is a never ending increasingly large part of core inflation.  Medical care services were up 0.5% for the month and have increased 4.1% for the year.  By themselves, physician's services increased 0.7% for the month.  Graphed below is the overall medical care index, which increased 0.5% for the month and is up 4.0% from a year ago.


CPI Medical index


Below is a graph of the medical commodities index, which is mostly prescription drug prices.  Medical commodities increased by 0.4% for the month and is up 3.6% for the past year.  Prescription drugs by themselves increased a whopping 0.9% for the month and are up 5.2% for the year.  That's disgusting and pharmaceutical companies, your greed is showing.


CPI Medical commodities


Real hourly earnings increased 0.4% in July for all employees.  Real means wages adjusted for inflation.  CPI didn't increase while wages increased by 0.3%  For the year real hourly earnings have increased 1.7%, finally staying slightly ahead of inflation, although of course there was no overall inflation.  The average real hourly wage is now $10.71 and the average wage, not adjusted for inlfation is $25.69.  Weekly real earnings increased 0.6%.  Real weekly earnings now stand at $369.56.  Average weekly hours increased 0.3% and weekly wages increased 0.66%.  The work week is now 34.5 hours.  There is a separate category for production and nonsupervisory employees and their real hourly earnings increased 0.3% to $9.23 and their real weekly earnings increased 0.7% to $311.20.

CPI details

The DOL/BLS does take yearly surveys on where the money goes in the monthly budget, but as one can see, food and energy are significant amounts of the monthly finances.  Run away costs in these two areas can break the bank, so can food.  Additionally CPI uses substitution, so if flour goes through the roof, somehow we're all just fine with oats and prices didn't really overall increase much. Here is the BLS CPI site, where one can find much more details, information on calculation methods and error margins.

Other CPI report overviews, unrevised, although most graphs are updated, are here.   If you're wondering why the graphs display different figures from the text, the graphs calculate percentages from the index and do not round.  The actual data from the BLS report does round to one decimal place. In other words, 0.05% is rounded to 0.1%.

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