July inflation data show the lowest monthly gain in consumer prices since February
Below, EPI director of research Josh Bivens offers his initial insights on today’s release of the Consumer Price Index (CPI) for July. The data show the lowest monthly gain in consumer prices (0.5%) since February and ultimately support a transitory view of inflation. Read the full Twitter thread here.
The core index (excluding food and energy) saw an even much larger deceleration – rising 0.3% in July from 0.9% growth the month before. The big story in the data is that the used car price spike finally flattened out. 2
— Josh Bivens (@joshbivens_DC) August 11, 2021
Measures of composition-adjusted wage growth in the labor market are pretty tame and even decelerating in recent quarters. And unit labor costs in the productivity news release earlier this week showed growth of just 1% at an annualized rate. 4
— Josh Bivens (@joshbivens_DC) August 11, 2021
In short, the mid-year inflation spike is real, but largely contained. It continues to be far, far too early to think the data merit serious Fed tightening right now. The recovery is going quite well – we should keep fostering it, not trying to weigh it down. 5
— Josh Bivens (@joshbivens_DC) August 11, 2021
Enjoyed this post?
Sign up for EPI's newsletter so you never miss our research and insights on ways to make the economy work better for everyone.