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The story of this month’s CPI report is summed up in the first few graphs below: the shelter portion of the index continues its slow deceleration, while the non-shelter portion of the index appears to be in a slowly rising trend. This has resulted in headline inflation trending ever so slowly lower, while core inflation shows no deceleration at all.

First, here are the month-over-month numbers for headline inflation (blue), core inflation (red), and inflation ex-shelter (gold) for the past two years:
 

Note that I am no longer including the big inflationary spike of 2021-22. We all know about that, and we know that once gas declined from $5 to $3 a gallon in late 2022, as the supply chain un-kinked, inflation ex-shelter cooled rapidly. What the above graph shows is that since then, there have been fewer outright declines in prices ex-shelter, and bigger increases. Meanwhile, there has been a slight trend of lower monthly increases in headline inflation, leading to roughly steady increases in core inflation.

Here is the YoY% look at the same data:
 

This is the graph that best tells the story: an apparent uptrend in non-shelter inflation, a slight deceleration in headline, and over the past 12 months flat YoY core inflation.

Looking at shelter specifically, we see once again that house prices lead by roughly 12-18 months. As YoY price advances in repeat home sales have waned again (and, per the experimental new and total tenant rent index I updated several weeks ago, new rents have gone sharply negative YoY, leading the total to continue its deceleration), shelter inflation has resumed its gradual deceleration:
 

On a monthly basis, both fictitious owners’ rent as well as actual tenants’ rent increased 0.3%, and YoY they advanced 4.1 and 3.5% respectively. These are the lowest YoY% increases since the beginning of 2022.

Underneath these big trends there are some other notable ripples in the pond.

Transportation services (mainly car repairs and insurance) lag the prices of new and used cars. The former have steadied for the past 2.5 years, while the latter decreased into last year, but have started to increase again, and are now up 30% compared to their pre-pandemic level:
 

Since used vehicles are something of a substitution good for new vehicles, this suggests renewed pressure on consumers - perhaps because of the interest rates on car loans, and perhaps also because of the pressure on their loans generally due to the sudden lapse of student loan payment abatements.

This has resulted in price increases of over 5% YoY for motor vehicle repairs and insurance, and in the past several months, the pace has turned back up:
 

Looking at a couple of other problem children, recently, price increases in medical care services have also re-accelerated, and did so again this month:
 

And prices for meat in particular are up almost 6% YoY, although inflation in the protein and dairy complex as a whole has cooled somewhat:
 

Finally, although I won’t use graphs, I did spend some time looking for specific impacts from tariffs. At first glance, so far they appear to be sporadic. Banana prices are up 4.3% YoY, and coffee prices up 14.5%. Contrarily, appliance prices declined -0.3% for the month, and are down -1.1% YoY.

Last month, I wrote that consumer inflation was in a transitionary period. This continued to be the case in July, as shelter continues its disinflation, while other products and services have begun to re-accelerate in price. The widespread further increases in tariffs that were announced at the beginning of this month will only add to that acceleration over the coming months.

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