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July Inflation Data - Full Breakdown

July Inflation Data - Full Breakdown

August 10, 2022

All eyes were watching the Bureau of Labor Statistics website this morning when they released the July inflation data.  Last month the news pundits had their heyday touting 9.1% annual inflation rates, but this month they're forced to present better news snippets. Month on month inflation was flat from June to July 2022, which is great news for the US consumer.  On the annualized rate for the month of July we are still inflating at an 8.5% pace (slightly better than the 9.1% from last month).  

It is wise to not focus as much on the annualized pace because it can vacillate depending on what inflation was like in the prior year. For instance, next June in the year 2023 the annual pace will probably be flat to down because June of 2022 was so high!  The monthly pace of inflation is the focus of monetary policy by the Fed and will sway their decisions going forward as to how drastically they need to lift key interest rates. 

Here are some useful charts on July's inflationary read:

This is month over month pace (key for the Federal reserve)

This is annual rate. Key in on 'items less food and energy' here which is tapering since May.

Look at the chart breakdown below to get a feel for how your personal budget may be effected by inflation.  Certain consumers are impacted by price changes in food or shelter more than others, while energy could be the major concern for you if you have along commute to work. 

Energy by far was the largest detractor from month on month inflation, but other areas to note that are crucially important to the average US consumer are:  commodities, new vehicles, used vehicles, apparel, shelter, transportation services, and medical care all of which slowed from June to July. Food inflation was sticky from June to July and will be a key category going forward to see drop. 

The market reacted positively today following through on July's price momentum.  Investors showing confidence in the chances that the US economy may have a 'softer landing' instead of fearful of a dreaded deep recession similar to 2008.  After the data release today, the market is already pricing in chances that the Federal Reserve only lifts rates .50 instead of .75 like last month.  While nothing is certain, we are definitely relieved to see inflation take a short pause this summer.  

If you have questions about these inflation numbers, how they are effecting our outlook or your portfolio risk we would encourage you to give our team a call!