Inflation Up Slightly In July, Administration Says Overall Trend Remains Positive

The latest inflation data came out Thursday, showing a very modest increase for the month of July. Still, overall, many analysts feel the economy is moving in the right direction and inflation is easing.

The Bureau of Labor Statistics said, year to year, prices in July were up 3.2 percent, a modest increase over June's three percent CPI. Just the same, officials with the Biden administration said the latest numbers are encouraging.

"It’s quite clear that inflation is moving in a good direction," White House National Economic Council Deputy Director Bharat Ramamurti said in an interview Thursday.

Deputy Director Ramamurti said, even with the slight uptick last month, the big picture shows a two-thirds drop in inflation since June 2022, when the CPI reached 9.1 percent.

"Which is a lot of progress," Ramamurti noted. "And at the same time, while we’ve seen that sharp reduction in inflation, we’ve seen the economy continue to motor along."

The administration points to a resilient job market, increasing wages, and the lowest unemployment rate in five decades.

And there are more specific positive signs in the labor report: airline ticket prices were down 8.1 percent in July and used cars were down 5.1 percent. But energy and food costs rose, and most significantly, so did shelter costs.

"The main driver right now of inflation is housing," he said, "and that’s, in some sense, a good story."

Because, Ramamurti said, it's pretty clear that, with the Federal Reserve having raised interest rates so much, the housing market is going to cool. In fact, he says, the data is already showing as much.

"Based on what we know about rental prices," Ramamurti said, "we would anticipate that the housing portion of inflation will come down and be reflected in the data over the next few months."

Administration officials acknowledge inflation has been tough on families, but they said their response, combined with the Fed raising rates, is working.

"If you look at where we are today compared to the other leading economies in the world," he explained, "the United States has had the highest economic growth since the pandemic began and has the lowest inflation currently of all of the world’s leading economies."

There will be one more month of inflation data before the Fed meets next and decides if interest rates should stay where they are or go higher still.