Still No Recession
Inflation Ticks Back Up

Inflation Stays Lowish

Today's CPI report indicates that lower inflation is probably here for a while. Year-over-year growth in the CPI was just 3.2% in July (see the graph below). This follows on the heals of 3.1% inflation last month.  You can see from the graph that inflation is now back down into its normal range.

Inf 0723

The lower inflation reflects the Federal Reserve's commitment to bring inflation down to the 2% target range.  Just one year ago, inflation was 8.4 percent.

Keeping in mind that inflation is the growth rate of the general (overall) price level, it is still interesting to look at changes in some individual prices.  The table below shows a selected few "big movers," or prices that moved a lot in the past year. The last column also gives the weight assigned to these categories in the overall CPI.  Recall that this weight is equivalent to the portion of a typical consumer's monthly budget spent on these categories.

CPI Table 0723

As you can see, gasoline prices fell by almost 20% over the past year and the typical consumer spends about 3.4% of their monthly budget on gasoline. Frozen vegetable prices rose dramatically over the past year, climbing 17.1 percent.