After hitting its lowest point since March 2021 in June, inflation increased slightly in July.
The annual inflation rate moved from 3 percent to 3.2 percent, according to new data released Thursday by the U.S. Bureau of Labor Statistics.
The news of the slight increase follows the Federal Reserve’s decision in July to raise its target rate for federal funds by 25 basis points to 5.25 to 5.5 percent. It was the 11th hike since early 2022.
The Federal Reserve remains committed to its target of shrinking inflation to 2 percent. In his remarks following news of the latest hike, Federal Reserve Chairman Jerome Powell said a decision on another possible rate increase would be dependent on the consumer price index reports for July and August and the labor reports.
“We’re going to look at the data, and that could mean another hike in September or we could decide to maintain at that level,” Powell said. “The question we’re going to be asking is the overall signal is we need to do more and tighten further. If we get that signal and that’s the collective judgment of the committee, we’ll move ahead.”
The 3.2 percent inflation rate is still far below the high of 9 percent from last year. It is also below the reported rate in May at 4 percent.
The core index, minus the volatile food and energy prices, was down slightly in July at 4.7 percent. The index was at 4.8 percent in June.
The CPI rose 0.2 percent in July, the same as June.
“The index for shelter was by far the largest contributor to the monthly all items increase, accounting for over 90 percent of the increase,” the BLS reported.
The index for used cars and trucks decreased 1.3 percent. Used vehicles are down 5.6 percent in the past 12 months.
Car insurance increased another 2 percent in July and is up 17.8 percent in the past 12 months.