Inflation in July was very low. That makes three months of very low inflation.
Posted on August 16, 2024
The inflation report issued Wednesday showed a third month of low inflation. Core inflation for the last three months is at an annual rate of 1.6%. These are the lowest three months in more than four years, before the start of sharp monthly increases in June 2020. Core inflation is closest to the Fed’s favored measure of inflation, PCE, that will be reported for July at the end of this month. This post contains several graphs that show the trends in inflation.
I display a table and the same six graphs that I’ve use to follow the trends in inflation.
The two most widely-reported measures of inflation are Seasonally-adjusted inflation and Core inflation.
Seasonally-adjusted inflation is the most widely reported measure of inflation. Inflation for the last three months averages to an annual rate of 0.4%. We have to go back more than four years to find three months lower than this. The last six aim at 2.5% annual rate.The rate over the last 12 months is 2.9%.
Inflation in the next two months will replace two high months in the 12-month calculation: we may be looking at 2.5% historical rate soon – maybe next month.
Core inflation excludes volatile energy and food components. This is similar to the measure favored by the Federal Reserve. Inflation for the last three months average to an annual rate of 1.6%. We also have to go back more than four years to find three months that were lower. The last six aim at an annual rate of 2.8%. The last 12 have been at 3.2%.
Personal Consumption Expenditures (PCE) excluding Food and Energy is the measure of inflation that the Federal Reserve Board favors. The graph shows the data ending June; the data for July is issued at the end of this month. The last six aim at an annual rate of 3.4%, but the last three point to 2.3% annual rate. 12-month inflation is 2.6%.
== History of 12-month inflation ==
Full-year inflation measured by CPI-U shows that inflation for the last 12 months continues the recent downward trend. 12-month inflation is 2.9%.
== Producer’s Price Index ==
The change in producer prices will impact consumer inflation. PPI for July increased much more than the other measures of inflation. The last six months are at a 5.1%. annual rate.
== Services ==
Inflation for services was 0.3% in July, a bit more than the prior two months. The last three months average to 2.6% annual rate. The last six are at an annual rate of 5.5%.
Conclusion: Monthly inflation in July was the third month of low inflation. We have to go back more than four years to find three months that were lower. The last six months of Core Inflation are at an annual rate of 2.8%.