For the first time since June 2022, the U.S. consumer price index increased, increasing by 0.2 percentage points to 3.2% for the 12-month period ending in July, the Bureau of Labor Statistics said on Thursday.
According to the BLS, the overall price of goods increased by 0.2% from June to July as the price of goods and services has seen more modest price gains compared to the year prior. The consumer price index peaked in June 2022 at 9.2%. The prior consumer price index of 3% marked the lowest U.S. inflation rate in the last two years.
The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily. While energy prices have dropped the least, inflation continues to be high for food and shelter.
The price index for shelter rose 7.7% from last July to this July. The cost of food increased by 4.9%. Bakery items, sweets, frozen fruits and vegetables and noncarbonated drinks are among the items with the steepest price increases at grocery stores.
The Federal Reserve has stated its goal is to get the annual rate of inflation to 2%. In hopes of dropping inflation, the Federal Reserve has placed interest rates at their highest levels in 16 years.
On July 26, Federal Reserve Chair Jerome Powell increased the effective federal rate range 0.25 percentage points to 5%-5.25%. Powell has suggested another interest rate hike could come in September, which could make interest rates their highest in over 20 years.
One bit of good news is wages have more than kept up with inflation in the last year, meaning Americans have regained some of the buying power lost when inflation was at its highest. Real average hourly earnings increased by 1.1% as wages increased by 4.4% from July 2022 through July 2023.