According to the Bureau of Labor Statistics, the headline consumer price index came in line with expectations, rising 3.4% year over year in July following a 3.5% annual gain in June. The decline in headline price growth was largely driven by continued normalization in energy prices, however it remains up 14.7% year over year. Meanwhile, the index for shelter accounted for roughly two-thirds of the headline print, up 3.2% year over year. Core CPI, excluding volatile food and energy prices, rose 2.5% year over year in July, matching expectations.
The ABA Office of the Chief Economist believes that this month’s inflation reading marks continued normalization in price growth, but overall inflation remains above the Federal Reserve’s target. Consistent easing in inflation could improve business confidence and appetite for investment, while ongoing price pressures may continue to strain consumer finances and increase credit risk.
