July inflation breakdown: Where are prices rising and falling the fastest?

Inflation rose in July for the first time in more than a year as a spike in the cost of rent, gasoline and groceries kept prices abnormally high for millions of U.S. households. 

The Labor Department said Thursday that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries and rents, rose 0.2% in July from the previous month, in line with estimates.

Prices climbed 3.2% from the same time last year, up from 3% in June but slightly below the 3.3% forecast from Refinitiv economists. It marked the first acceleration in the headline figure in more than a year, underscoring the challenge of taming high inflation.

“Lower airline, used car, and medical care prices helped keep inflationary pressure under check, while still high shelter costs were the primary driver of headline price increases during the month,” said Sam Millette, fixed income strategist for Commonwealth Financial Network. 

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Here is a breakdown of where Americans are seeing prices rising and falling the fastest as they continue to wrestle with sticker shock.

Rent

Shelter costs, which account for about 40% of the core inflation increase, rose 0.4% for the month and are up 7.7% over the past year. 

It was the largest contributor to the monthly increase, the Labor Department said in the report, accounting for 90% of the inflation spike in July. 

Rising rents are concerning because higher housing costs most directly and acutely affect household budgets. Another data point that measures how much homeowners would pay in equivalent rent if they had not bought their home climbed 0.5% from the previous month. 

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Food

Food has been one of the most visceral reminders of red-hot inflation for Americans. In July, the cost of groceries increased for the third straight month, reversing earlier declines.

Grocery prices climbed 0.3% over the course of the month, according to the data. On an annual basis, prices remain up 3.6% compared with the same time last year.

Consumers paid more for a number of items in July, with the price rising for hot dogs (2.7%), beef and veal (2.4%), apples (2.4%), oranges (1.6%), coffee (1%), rice (0.9%) cookies (0.8%), ham (0.6%) and fresh vegetables including potatoes (0.7%) and tomatoes (0.4%). 

There were some substantial declines in food prices last month. The cost of eggs, which surged earlier this year amid an outbreak of the avian flu, dropped 2.2% in July. The price of eggs is now down 13.7% when compared with the same time last year.

The price of chicken, fresh fish and seafood also posted notable declines. 

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Energy

Energy prices increased again in July, rising 0.1% over the course of the month. That included a 0.2% rise in gasoline. 

However, gas prices are down 19.9% compared with the same time last year, when the average cost for a gallon of regular was running around $4.01.

Economists expect to see an additional increase in the cost of gasoline in the August CPI report, due in early September, as the price of oil marches higher following supply cuts by OPEC+.

The average cost of a gallon of regular gasoline was about $3.82 on Thursday, according to AAA, up more than 4% from the same time one month ago. 

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“It was somewhat surprising to see gasoline prices up just 0.2% in the July report, with AAA reporting a big increase in the national average price in the latter half of the month,” said Bill Adams, chief economist at Comerica Bank. “Gasoline will drive higher CPI inflation in August.”

Cars

There was some good news for Americans looking to buy a car in June. 

Used car and truck prices, which have been a major component of the inflation increase, fell 1.3% over the month and are down 5.6% compared with the same time one year ago.

The cost of new cars and trucks also ticked lower, falling 0.1% in July From the previous year, new vehicle prices are up 3.5%.

Travel and Transportation

Airline fares fell again in July, with prices dropping 8.1% from June. Tickets are down about 18.6% compared with last year, according to the data.