Driven by falling energy prices, headline inflation sat at 8.5% in July year over year. With impressive drops in gasoline (-7.7%) and utilities (-3.6%), inflation was unchanged month over month after June’s large 1.3% increase.
Core inflation, stripped of volatile food and energy costs, rose 5.9% over the last 12 months, holding steady at an elevated level. High core prices show that inflation is embedded into the economy and will be watched closely by the Fed leading up to their next interest rate decision in September.
As consumers shift their spending from goods to services, inflation