Consumer Prices Rise 0.3% on Gas, Housing Costs

Shoppers in the Levi’s store in New York’s Times Square survey a T-shirt display on June 14, 2019. (AP Photo/Richard Drew, File)

(CN) – After months of barely noticeable upticks, American consumer prices increased 0.3% in July, driven by the higher cost of gas, housing and medical services.

The consumer price index, a primary gauge of inflation pressure that measures what U.S. consumers pay for a wide range of products, is up 1.8% from a year ago, compared to the 1.6% annual increase seen in June.

The 0.3% gain from June to July comes after two straight months of 0.1% increases.

Gas prices rose 2.5% in July while rent went up 0.3% and medical care services increased 0.5%, according to a Labor Department report released Tuesday.

Costs for clothing, used vehicles, electricity, hotels and airfare were also up, reflecting widespread but modest price increases. Food prices were unchanged.

Excluding the always volatile food and energy sectors, core consumer prices increased 0.3% in July and are up 2.2% from this time last year.

Low inflation – along with trade wars and global growth fears – spurred the Federal Reserve to lower interest rates two weeks ago for the first time since the start of the recession more than a decade ago.

Inflation has consistently stayed below the Fed’s 2% annual target, as the U.S. economy marked a record 10 consecutive years of growth last month.

The ongoing trade war with China has deepened concerns about an economic slowdown in the U.S. and in global markets. American economists expect yearly growth of about 2.5% in 2019, down from 2.9% last year.

Many expect the Fed to cut interest rates against next month amid the worsening trade situation.

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