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The CPI Rose 0.4 Percent in July

The BLS reports the CPI Rose 0.4 Percent in July, higher than the Bloomberg Econoday consensus of 0.3 percent.

The BLS reports to a single decimal place. I calculate two decimal places.

CPI Month-Over-Month Percent Details

• All Items: 0.38
• All Items Except food and Energy: 0.32
• Food and Beverage: 0.47
• Food Away from Home: 0.29
• Food at Home: 0.58
• Shelter: 0.44
• Owners’ Equivalent Rent (OER): 0.38
• Rent of Primary Residence: 0.30
• Medical Care Services: -0.14
• Medical Care Commodities: -0.26
• Energy: 0.69
• Gasoline: 1.91

Other than medical care, this report was a disaster.

The Fed, when it looks at the CPI, looks at core CPI, all items except food and energy. That was a less than stellar 0.32 percent increase for the month.

The Fed’s preferred measure of inflation is the PCE price index, out later this month.

The PCE overweighs medical care whereas the CPI overweighs shelter. Medical Care Services is a very hot 0.79 percent. On this basis, the next PCE report will be better.

I will cover food, in a second post.

CPI Year-Over-Year Percent Change

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CPI Year-Over-Year Details

• All Items: 2.9
• All Items Except food and Energy: 3.1
• Shelter: 3.6
• Medical Care Services: 4.2
• Medical Care Commodities: 0.0
• Rent of Primary Residence: 3.5
• Owners’ Equivalent Rent (OER): 4.0
• Food and Beverage: 3.1
• Food at Home: 2.7
• Food Away from Home: 3.9

The CPI bottomed in March of 2025 at 2.3 percent, now 2.9 percent.

Food and Beverage bottomed in April of 2025 at 2.7, now 3.1 percent.

CPI less food and energy bottomed in March of 2025 at 2.3 percent, now 3.1 percent.

Scant Grounds for Fed Rate Cut

There are scant grounds in the CPI for a rate cut on September 17.

But the Fed will do what it wants to do. The Fed’s justification will be labor market weakness. So, Trump will finally get his way.

But looking ahead, the Fed will have to deal with these clearly (for now) stagflationary tariff-sponsored details.

Screwed Up Measures of Inflation

These CPI and PCE reports are all worse than they look because both are very screwed up measures of inflation.

For starters, the BLS incorrectly underweights food away from home.

For discussion, please see Where Do You Spend Money on Food? How Screwed Up Are the BLS Weights?

Does the BLS match your budget?

BLS miscalculations on shelter are even more pronounced.

Is Homeowners Insurance Understated in the CPI?

I discussed very serious errors in the BLS calculation of shelter inflation in Is Homeowners Insurance Understated in the CPI? Shop Around!

Our Insurance went up by $2,000. Then another $2,000. Here’s our story.

The BLS does not factor in homeowner’s insurance at all, only a home’s contents.

Click above link for details.

More By This Author:

How Much Money Have Trump’s Tariffs Raised? What’s The Impact?
Producer Price Index Unexpectedly Tame In August After Blistering July
How Much Is Inflation Reducing Your Hourly Wages?