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Economic News

United States: Temporary Uptick in Inflation

August 10, 2023
Marc-Antoine Dumont
Senior Economist


  • The US consumer price index (CPI) rose 0.2% in July after an identical increase in June and a 0.1% advance in May.
  • Energy prices were up 0.1%, including gains in fuel oil (+3.0%), natural gas (+2.0%) and gasoline (+0.2%). Food prices climbed 0.2% after edging up 0.1% the month before.
  • Core CPI, which strips out food and energy, rose 0.2% for the second straight month.
  • The all items index increased 3.2% for the 12 months ending July, up slightly from 3.0% in June. Core inflation ticked down from 4.8% to 4.7%.


Headline inflation rose in July for the first time in 12 months, but the increase was primarily due to base effects. And while headline inflation is down sharply from its 8.9% peak last June, the decline is mostly attributable to the 12.5% drop in energy prices over the past year. Food inflation has also slowed, with food prices increasing 4.9% year-over-year in July compared to 11% last fall.

We’re also seeing an improvement in core inflation, which strips out food and energy. For the first time since early 2021, it has risen less than 0.3% for two months in a row. The price of goods excluding food and energy was down 0.3%. This was helped by a 1.3% drop in used car and truck prices, which are expected to decline further in the coming months.

Prices for services excluding energy picked up in July, however. Shelter costs were the main contributor, posting a monthly gain of 0.4%. But in good news for consumers, medical care (-0.4%) and airfares (-8.1%) were both cheaper in July.


Headline inflation continues to look better than it did last year due to lower energy prices. Despite edging up slightly in July, it's gradually approaching a more comfortable level for the Federal Reserve, which will likely resume its interest rate pause. The Fed will also be keeping a close eye on annual CPI as last year’s higher inflation readings fall out of the calculation.