CPI -2.1% YOY To July, Core CPI +1.5% YOY To July, Inflation Fears Off Again

The US Consumer Price Index, which measures inflation at the consumer level of the economy, was unchanged in July and -2.1% year-over-year through July. Excluding volatile oil and food costs from the readings, “Core” CPI for July was +0.1% and +1.5% YOY through July. You can view and download historical CPI data by scrolling down to our Data section on the right side of the site.

Inflation is clearly within the Fed’s comfort zone of 1-2% even though just last month it was hotter than anticipated. Since February, when deflation concerns were driving markets, we’ve see-sawed each month from economic weakness to inflation fears, which cause rates to fall and rise respectively. Rates are tied to bond trading and bonds don’t like inflation so they sell off on inflation fears, pushing price down and yield (or rate) up. Much of the inflation concern last month was from rising oil prices leading into and during the summer driving season and in a longer-term sense, many market participants feel inflation is the ultimate effect of massive government stimulus. Conversely, market traders think inflation shouldn’t be an issue for some time because aggregate demand is compromised by weakened consumers and businesses. Bond markets still rally on a report like today’s, showing weaker inflation.