August 16, 2019 — Inflation Remains Strong in July


Inflation remained high in July as the recovery continued; consumer prices rose 5.4 percent from a year ago.  This is the highest 12-month increase since 2008.  However, on a monthly basis, inflation rose 0.5 percent in July from June, almost half the 0.9 percent increase in June from May, but still significantly above the monthly average of 0.2 percent between 2000 and 2019.  The Core Price Index was up 4.3 percent year over year, down slightly from 4.5 percent seen in the prior month.  Market watchers are wary, waiting to see how the recent rise in Covid infections will play out in the fall with consumers becoming more cautious as they go about their daily activities.

Wall Street economists expect inflation to persist, but to slow down to a 4.1 percent rate in December, that compared to the average 1.8 percent inflation rate experienced through 2019.

The Fed remains on track to taper its $120 billion of monthly asset purchases later this year, and is cautiously waiting for more data releases to make sure the economy is really on track before stopping this part of their stimulus measures.