Year-over-year inflation reached its lowest level in more than three years in July, the Associated Press reports, in the latest sign that the worst price spike in four decades is fading and setting up the Federal Reserve for an interest rate cut in September.
Today’s report from the Labor Department showed that consumer prices rose just 0.2% from June to July after dropping slightly the previous month for the first time in four years. Measured from a year earlier, prices rose 2.9%, down from 3% in June. It is the mildest year-over-year inflation figure since March 2021.
The government said nearly all the increase last month reflected higher rental prices and housing costs, a trend that, according to real-time data, is easing.
Excluding the volatile food and energy categories, so-called “core” prices climbed 0.2% from June to July after a 0.1% increase the previous month. Compared to a year ago, core inflation rose 3.2%, down from 3.3% in June and the lowest since April 2021. Core prices are closely watched by economists as a sign of where inflation is headed.
Prices are still rising sharply for some services, including auto insurance and health care. Auto insurance costs have shot up as the value of new and used vehicles has soared compared with three years ago. Economists, though, expect those costs to eventually grow more slowly.
