Prices rose slightly in July, and the possibility of another interest-rate increase remains.
I planned to wait until Friday for the next Economic Journal, but this morning’s inflation report seemed worth a quick update.
The Federal Reserve’s preferred inflation measure rose 0.2% in July. Overall inflation remained at 3.7% over the past year, while core inflation—which leaves out food and energy—held at 3.3%.
In everyday terms, prices are not suddenly taking off again, but they are not giving us much relief either. Energy costs remain affected by the Iranian war, while housing, healthcare, insurance and other services were becoming more expensive long before the war began.
The question many of us have is whether interest rates could rise again. Today’s report keeps that possibility alive, although it does not suggest that a long series of increases is coming.
I may keep a closer eye on rates as I think about purchasing a vehicle. My daughter will also be watching mortgage rates when the time comes to sell her house. Higher rates can make monthly payments more expensive and reduce the number of buyers able to afford a home.
If the war ends, lower gasoline and transportation costs could bring some welcome relief. But with core inflation still at 3.3%, the war is clearly not the entire problem.
For now, inflation is not surging—but it remains stubborn, and another small interest-rate increase is still possible.
View the inflation data from the Bureau of Economic Analysis
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