Consumer price inflation staged a return in July and beat economists' expectations. Even though this means prices for consumers rose on the whole, it is a good sign because it comes after the largely deflationary shock of the pandemic.
Prices increased by 0.6% on a seasonally-adjusted basis in July, the same amount as in June, the Bureau of Labor Statistics reported Wednesday. Together, the summer month increase puts a solid end to three months of price declines during the height of the pandemic lockdown. Over the past twelve months, prices increased by 1%, not adjusted for seasonal effects.
Gas and energy prices, which soared in June, continued to increase. Gasoline prices alone contributed about a quarter of the monthly price rise last month.
Meanwhile, food prices actually declined by 0.4%, and the 'food at home' index fell 1.1%. The 'food away from home' index rose 0.5%, showing that Americans are eating out more again.
Core inflation, which strips out more volatile food and energy items, rose 0.6% in July, the largest increase since January 1991, according to the BLS.
Moderate inflation is important for a functional growing economy. Some market participants are worried that the large sums of stimulus money from Washington, particularly the Federal Reserve, could lead to too much inflation, but the Fed has repeatedly said that it's not concerned about this right now.