Inflation hit 3.2 percent year-over-year in July from 3 percent in June, the largest upward movement since last June.
Inflation is turning into a referendum on housing costs, with the vast majority of the increase coming from shelter — the sector perhaps most closely tied with Federal Reserve interest rate hikes.
“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 Labor Department noted.
The Fed has hiked interest rates 11 times since since it began battling inflation in March 2022. High interest rates hit financing-dependent sectors of the economy, and housing costs aren’t the only prices that remain stubbornly high.
Car costs are also contributing to the upswing in inflation. Soaring car insurance prices in particular contributed to the headline inflation, surging 2 percent last month and 17.8 percent annually, the Labor Department said.
Nursing homes and elder care facilities are also bucking the trend of falling inflation. Prices for these services rose 2.4 percent in July and were up more than 5.6 percent from a year ago.
But overall, core commodity prices are deflating quickly. Removing volatile food and energy costs, prices fell by 0.3 percent in July, down from 0.1 percent in June.
“Look at the sectoral patterns, we have not seen an across-the-board rise in inflation in prices, which is sort of the classic inflation pattern. We’ve seen prices increasing in very specific parts of the economy with different patterns,” economist J.W. Mason of John Jay College at The City University of New York said during an event earlier this year.
The Hill’s Tobias Burns breaks down the main takeaways here.
