What do the latest July data mean for the US economy?

As the Labor Department reported in its consumer price index on Wednesday, consumer prices rose a modest 2.9% in the 12 months through July. This annual rate suggests that the historic rise in inflation in 2022 is continuing to ease.

The annual inflation rate had not fallen below 3% since March 2021. After a brief increase in the spring, inflation fell slightly this summer.

On a monthly basis, prices rose by 0.2%. Food prices rose by 2.2% year-on-year. Energy prices rose by 1.1% and gasoline prices fell. Much larger price increases were seen in transport services (8.8%) and accommodation (5.1%).

The rise in housing costs accounted for “nearly 90 percent of the monthly increase” in overall inflation, the Labor Department reported. Transportation and housing costs drove up “core inflation,” a closely watched measure that excludes volatile food and energy categories, which rose 3.2 percent year over year.