Consumer Prices Rise Slightly

Smallest Advance In 3 Months

Consumer Prices RiseThe U.S. Labor Department announced this week that the closely-watched consumer price index climbed 0.1% in July, the smallest advance in three months. While data showed the index rose 0.3% in June, consumer prices increased just 0.2% for the 12 months ended July 31.

The core index, which excludes food and fuel, also rose 0.1% in July, after a 0.2% jump in June. Over the past three months, core prices increased at a 1.8% annualized rate, down from a 2.6% annualized increase in the three months ended in April. This cooling of price pressures could give Federal Reserve officials reason to hold off on a much-discussed September rate hike. Inflation that runs at 2% has been a stated Fed target.

Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, wrote in a Wall Street Journal opinion piece this week that raising rates prematurely would hurt the U.S. economic recovery. β€œThe U.S. inflation outlook provides no justification for policy tightening at this juncture,” said Kocherlakota.

Looking within July segments, a 5.6% drop in airline fares last month – the largest decline in 20 years – pushed prices down, according to the Labor Department report. Rents and hotel rates moved higher, though, driving prices upward. Gasoline prices also rose 0.9% after increasing 3.4% a month earlier. Food prices were up 0.2%, data showed.