With a continued drop in energy prices offset by higher prices for food, shelter and medical care, the Labor Department released a report on Wednesday showing that U.S. consumer prices unexpectedly came in unchanged in the month of July.
The Labor Department said its consumer price index for July showed that prices were unchanged for the second consecutive month. Economists had been expecting prices to edge up by about 0.2 percent.
Energy prices showed a modest decrease for the month, edging down by 0.3 percent in July after tumbling by 1.4 percent in June.
The continued drop in energy prices was largely due to a 1.3 percent decrease in electricity prices, which helped to offset a 0.3 percent increase in gasoline prices.
Meanwhile, the report showed that food prices crept up by 0.1 percent in July following a 0.2 percent increase in the previous month.
Higher prices for cereals and bakery products and meats, poultry, fish, and eggs contributed to the modest increase in food prices.
Excluding food and energy prices, the core consumer price index inched up by 0.1 percent in July after rising by 0.2 percent in each of the four previous months. The core index had been expected to show another 0.2 percent increase.
The increase by the core index was partly due to a 0.1 percent increase in prices for shelter, which reflected a 0.3 percent increase in rent and a 0.2 percent increase in owners' equivalent rent.
Prices for medical care also rose by 0.4 percent in July, while apparel prices increased by 0.2 percent. The tobacco index surged up by 1.1 percent.
Compared to the same month a year ago, the headline consumer price index rose by 1.4 percent in July. The annual rate of growth compares to 1.7 percent in June and is the slowest since November of 2010.
The core consumer price index increased at an annual rate of 2.1 percent in July, a slight deceleration from the 2.2 percent growth seen in June and the smallest increase since October of 2011.
Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, the statistical rate of change in CPI is benign for now where the Fed will continue to focus on the employment side of their mandate."
"This said, this cost of living index is just 0.2% from the record high reached in April at the same time many in this country unfortunately don't have wages at record highs," he added.
The Labor Department released a separate report on Tuesday showing the wholesale prices rose by slightly more than expected in July, with the price growth reflecting higher prices for light trucks, cigarettes, and pharmaceuticals.
The producer price index rose by 0.3 percent in July following a 0.1 percent increase in June. Economists had been expecting prices to increase by about 0.2 percent.
Excluding food and energy prices, the core producer price index rose by 0.4 percent in July after edging up by 0.2 percent in each of the two previous months. Core prices had been expected to show another 0.2 percent increase.
The increase by the core producer price index reflected the strongest core price growth since a 0.6 percent increase in January.
Compared to the same month a year ago, the headline producer price index rose by 0.5 percent in July, reflecting a deceleration from the 0.7 percent year-over-year growth seen in June. Core prices rose at an annual rate of 2.5 percent in July.
by RTT Staff Writer
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