• Overall increase is smallest since February.

• Core prices are up less-than-expected.

• Food & energy prices remain firm.

The Consumer Price Index rose 0.5% (5.4% y/y) during July after increasing an unrevised 0.9% in June. The gain matched expectations in the Action Economics Forecast Survey. The CPI excluding food & energy rose 0.3% (4.3% y/y) last month. A 0.4% gain had been expected.

During the last six months, the CPI surged 7.8% (AR) while the core CPI increased 6.8% (AR). These were the quickest rates of growth since the early 1980s.

Goods prices excluding food & energy improved 0.5% (8.5% y/y) last month after rising 2.2% during June and 1.8% in May. New vehicles strengthened 1.7% in July (6.4% y/y), similar to gains in the prior two months. Education & communication product costs strengthened 0.8% (-0.2% y/y) after falling 0.2% in June. Recreation product prices rose 0.5% in July (3.2% y/y) after falling 0.3% in the prior month. Appliance prices increased 0.4% (4.9% y/y) following a 0.1% uptick. Used car & truck prices improved 0.2% in July (41.7% y/y) after surging for three consecutive months. Medical care product prices rose 0.2% (NSA) after a 0.4% June decline, falling 2.1% y/y. Furniture prices improved 0.1% (3.0% y/y) for the second straight month. Apparel prices held steady last month (4.2% y/y) after jumping 0.7% in June.

Services prices increased 0.3% in July (2.9% y/y) after two months of 0.4% gains. Recreation services prices rose 0.6% (3.7% y/y) after a 0.5% gain. Shelter costs increased 0.4% last month (2.8% y/y) after a strengthened 0.5% June gain. The cost of lodging away from home surged 6.0% (21.5% y/y) in July, the fourth month of strength in the last five. The owners' equivalent rent of primary residences increased 0.3% (2.4% y/y) for the third straight month. Rents of primary residences gained 0.2% (1.9% y/y) for the sixth straight month. Medical care services prices rose 0.3% (0.8% y/y) following four months of relative stability. Education & communication services prices edged 0.1% higher in July (1.2% y/y) for a second straight month. Transportation services prices declined 1.1% in July (6.4% y/y) after four straight months of strong increase. Within that category, the cost of public transportation rose 0.4% (14.0% y/y) after surging in each of the prior three months. Airline fares eased 0.1% in July after rising 2.7% (+19.0% y/y) in June.

Energy prices surged 1.6% in July (23.8% y/y), about the same as in June. Gasoline prices jumped 2.4% last month (41.8% y/y) after a similar June gain. Fuel oil & other fuels prices rose 0.6% (NSA, 39.1% y/y) after rising 2.9%. Natural gas prices strengthened 2.2% (19.0% y/y), strong for the sixth straight month, while the cost of electricity rose 0.4% in July (4.0% y/y) following a 0.3% decline during June.

Food price inflation remained strong last month as prices gained 0.7% (3.4% y/y) after a 0.8% gain. Food-at-home prices also rose 0.7%, and by a strengthened 2.6% y/y. Meat, poultry & fish prices jumped 1.5% (5.9% y/y), strong for the third straight month, while egg prices spiked 1.6% (5.7% y/y). Dairy prices strengthened 0.6% (1.8% y/y), the largest rise in three months. Cereal & bakery product costs rebounded 1.2% (1.5% y/y) after falling 0.3%. Fruit & vegetable prices fell 0.9% (+2.2% y/y) and reversed June's increase. Nonalcoholic beverage prices strengthened 0.7% (1.1% y/y) after a 0.9% gain. Prices for food away-from-home rose 0.8% (NSA). The 4.6% y/y increase is strengthened from 2.1% in the middle of 2017

Return of the Original Phillips Curve from the Federal Reserve Bank of San Francisco is available here.

The Consumer Price Index data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.