The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in July on a seasonally adjusted basis after rising 1.3 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.5 percent before seasonal adjustment. 

Key Points 

• The gasoline index fell 7.7 percent in July and offset increases in the food and shelter indexes, resulting in the all items index being unchanged over the month.
• The energy index fell 4.6 percent over the month as the indexes for gasoline and natural gas declined, but the index for electricity increased. 
• The food index continued to rise, increasing 1.1 percent over the month as the food at home index rose 1.3 percent. 
• The index for all items less food and energy rose 0.3 percent in July, a smaller increase than in April, May, or June. 
• The indexes for shelter, medical care, motor vehicle insurance, household furnishings and operations, new vehicles, and recreation were among those that increased over the month. 
• The indexes for airline fares, used cars and trucks, communication, and apparel declined in July. 

Rent Continues to Rise

As expected in this corner, the price of rent continues to climb. It was the energy component that led to a benign report.

CPI Energy Month-Over-Month

Energy fell 4.6 percent led by gasoline down 7.7 percent. I expected the price of natural gas to rise but only the electrical component did, but not enough to flatten the energy index totally.

CPI Year-Over-Year

Year-Over-Year Details 

• The all items index increased 8.5 percent for the 12 months ending July, a smaller figure than the 9.1- percent increase for the period ending June. 
• The all items less food and energy index rose 5.9 percent over the last 12 months.
• The energy index increased 32.9 percent for the 12 months ending July, a smaller increase than the 41.6-percent increase for the period ending June. 
• The food index increased 10.9 percent over the last year, the largest 12-month increase since the period ending May 1979. 

Final Thoughts 

The market is roaring today on the allegedly benign report. However, the report is not as benign as it looks.

These rent hikes are permanent, and more are in the pipeline, but energy declines aren't. Other prices are falling due to supply chain healing (a good thing), but also demand destruction from recession. 

Bear market bounces end on good news, not bad. This may be as good as it gets for a while.

Real Output Per Hour Improves From Second Worst on Record to Simply Miserable

In case you missed it, please see Real Output Per Hour Improves From Second Worst on Record to Simply Miserable

The Fed's decade's-long effort to produce sustained inflation was a remarkable "success".

The Fed never bothered to take a bow. Instead, it's chasing its tail.

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