The annual inflation rate in the United States fell to 8.5% in July, a dip from 9.1% reported in the month of June. The Labor Department reported that overall, prices did not increase on the products and services they track between June and July.
Since early 2020 the annual inflation rate has skyrocketed, moving from almost zero to June’s 9.1% high. The 0.6% drop released today is the largest since surging inflation began. Inflation trends from August of last year are comparable to what the country experienced starting in August of 1973. At the time, inflation rose from 7.4% to a high of 12.3% in December of 1974. While the trends are similar, recent inflation has not risen into double digits.
There are eight major metro areas in the US that are reporting inflation rates over 10%. Phoenix is the second highest of these at 12.4%. The Labor Department staggers the release of inflation rates for urban areas every other month and all but one of the urban area rates were released in June when the national rate hit its current peak. Based on today’s decrease many of these urban areas could drop below 10% when they are updated in August.
The largest driver of annual inflation is energy. Fuel oils are up 75% annually. Gasoline is up 44% and airline fares, which are dependent upon the price of fuel, increased almost 28%. According to Labor Department numbers, all three of these energy categories have fallen considerably since June. Fuel oil is down 11%, while gasoline and airfare are both down almost 8%.
Many common grocery store items continue to see higher prices. In western states a carton of eggs is up $1.01. Milk is averaging $4.38 a gallon, up 77 cents annually. Proteins are experiencing even higher prices. Bacon has increased in price $1.09 to $7.57. Ground beef is up 69 cents to $5.46 and chicken breasts have increased $1.38 to $4.38.
Based off the data, the economic news remains mixed. Consumers are still paying much higher prices than last year for energy and common items, but most items either did not increase in price this month, or are starting to see prices fall.
