Consumer Prices Rise 0.2% in July, Matching Expectations

Services Sector

In contrast, service price inflation slowed to 2.6% year-over-year, down from 2.9% in June. Notably, transport prices decreased by 0.9% year-over-year, reversing the previous month’s growth, while communication services prices fell more sharply at -5.7% year-over-year.

Food Sector

Food price inflation continued its decelerating trend, rising 0.5% year-over-year, down from 0.8% in June. However, fresh produce prices accelerated to 2.8% year-over-year, up from 2.1%. Excluding fresh produce, food inflation remained nearly stable at 0.1% year-over-year.

Manufactured Goods

Manufactured goods prices held steady year-over-year, with clothing and footwear prices showing a slight acceleration to 0.9% year-over-year, while health product prices continued to decline but at a slower rate of -1.0% year-over-year.

Economic Implications

The implications of this inflation report are significant for the economic outlook. It is likely to keep an interest rate cut on the table for September, as policymakers weigh the moderate overall inflation against sector-specific pressures. Following the report’s release, stock futures remained relatively unchanged, while Treasury yields increased slightly. Gold prices continued to hover near all-time highs, reflecting ongoing economic uncertainties.

The mixed inflation outlook challenges policymakers to balance sector-specific pressures with overall economic stability. The next few months will be key in shaping monetary policy and the broader economy.