Inflation rate 2024 live updates — July rate increased 0.2% – what it means for supermarket and gas prices

Brief history of recent inflation rates

Inflation rates during the 1970s fluctuated between 3.3% and 11.3%.

In 1975, the Cost-of-Living Adjustment (COLA) was raised by 8%, while inflation stood at 9.1%.

By 1980, COLA reached an all-time high of 14.3%, compared to an inflation rate of 13.5%.

Throughout the 1990s, COLA increases were modest, typically ranging from 2% to 3% per year, due to significantly lower inflation rates.

In the early 2000s, inflation rates remained low, leading to no COLA adjustments in 2010, 2011, and 2016.

The Fed's take

The Federal Reserve has maintained its key lending rate at 5.3% — a level not seen in nearly two decades — since July 2023, per the BBC.

This decision has led to higher rates for mortgages, credit cards, and other loans for consumers.

By keeping interest rates elevated, the Federal Reserve aims to discourage borrowing and reduce the demand pressures that have been contributing to rising prices for homes, cars, and various goods.

Understanding inflation

In simple terms, inflation occurs when prices increase, leading to a decrease in the dollar's value.

This rise in prices impacts both goods and services.

Several factors can contribute to high inflation, including labor shortages, supply not keeping up with demand, rising raw material costs, and price gouging.

As a result, the American economy is feeling the strain, with higher costs for essential items like gasoline, food, and clothing.

A slow pace

Consumer prices in the United States experienced their slowest increase in over three years last month, strengthening the argument for the central bank to begin reducing interest rates.

According to the Labor Department, prices rose by 2.9% for the year ending in July, marking the smallest annual growth since March 2021 and a decline from 3% in June.

The monthly inflation report attracted significant attention following weaker-than-expected job growth in July, which had earlier led to stock market volatility and concerns about a potential recession.

Monthly inflation data in 2024

Here is the seasonally adjusted inflation changes from the preceding month in 2024:

• January: 0.3%
• February: 0.4%
• March: 0.4%
• April: 0.3%
• May: 0.0%
• June: -0.1%
• July: 0.2
• August: TBA

All other indexes in July revealed, continued

In July, the medical care index decreased by 0.2%, following a 0.2% rise in June.

Notably, the index for hospital services fell by 1.1%, while both the physicians' services index and the prescription drugs index saw a slight increase of 0.1%.

On the other hand, the motor vehicle insurance index rose by 1.2% in July, building on a 0.9% increase in June.

The index for household furnishings and operations also increased by 0.3%, with additional gains seen in the indexes for education, recreation, and personal care.

However, the automotive market faced challenges, as the index for used cars and trucks fell by 2.3%, following a 1.5% decrease in June.

Other notable declines included the airline fares index, which dropped by 1.6 percent, the apparel index decreasing by 0.4%, and the new vehicles index falling by 0.2%, reflecting a varied landscape in consumer costs.

All other indexes in July revealed

The index for all items excluding food and energy rose by 0.2% in July, following a 0.1% increase in June.

A significant contributor to this increase was the shelter index, which climbed by 0.4%.

Within this category, the rent index rose by 0.5%, while the owners’ equivalent rent increased by 0.4%.

Additionally, the lodging away from home index experienced a modest rise of 0.2% in July, recovering from a 2.0 percent decline in June, per the BLS.

Energy index remains 'unchanged' for July

In July, the energy index remained "unchanged," per the Bureau of Labor Statistics, following a 2% decline in June.

The gasoline index showed no change for the month, although, before seasonal adjustments, gasoline prices rose by 0.8%.

But the electricity index saw a slight increase of 0.1 percent, and the fuel oil index rose by 0.9%.

In contrast, the natural gas index fell by 0.7%.

Mixed trends for food in July, part three

The index for other food at home also experienced a 0.9% increase.

In contrast, the cereals and bakery products index remained unchanged, while the fruits and vegetables index and the dairy and related products index both fell by 0.2%.

On the other hand, the food away from home index rose 4.1% over the past year.

Within this category, limited service meals increased by 4.3%, and full service meals saw a rise of 3.8%, highlighting a stronger upward trend for dining out compared to home food prices.

Mixed trends for food in July, continued

The food away from home index increased by 0.2%, following a 0.4% rise in each of the previous two months.

Within this category, the index for limited service meals rose by 0.3%, while full service meals saw a more modest increase of 0.1%.

Over the past year, the food at home index has climbed by 1.1%.

The index for meats, poultry, fish, and eggs rose significantly, increasing by 3.0%, and the nonalcoholic beverages index saw a 1.9 percent rise.

Mixed trends for food in July

The food index rose by 0.2% in July, mirroring the increase from June, while the index for food at home increased by 0.1%, per the Bureau of Labor Statistics.

Among the six major grocery store food group indexes, three recorded gains, while the other three experienced declines.

Notably, the index for meats, poultry, fish, and eggs rose by 0.7%, driven by a significant 5.5% increase in egg prices.

The fruits and vegetables index also climbed by 0.8%, and the nonalcoholic beverages index rose by 0.5%.

In contrast, the index for other food at home decreased by 0.5 % in July after a 0.5 % increase in June.

The cereals and bakery products index saw a decline of 0.5%, while the dairy and related products index fell by 0.2%, highlighting the mixed trends within the food sector.

Quick summary of monthly rise

The index for all items excluding food and energy increased by 0.2% in July, following a 0.1% rise in the previous month.

Notable increases were seen in categories such as shelter, motor vehicle insurance, household furnishings and operations, education, recreation, and personal care.

In contrast, the indexes for used cars and trucks, medical care, airline fares, and apparel experienced declines over the month, reflecting a mixed picture of inflationary pressures in various sectors.

Shelter and energy rate revealed

In July, the index for shelter rose by 0.4%, contributing nearly 90% of the overall monthly increase in the all-items index.

The energy index remained unchanged after experiencing declines in the previous two months.

No changes expected

Economists project that annual price increases will remain steady at 3%, matching the rate seen in June.

Core inflation, which excludes food and energy prices, is expected to moderate slightly, suggesting a nuanced view of the overall inflation landscape.

It is said to remain cool this for July.