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July Price Statistics

The CPI rose at an annualized rate of 10.3 percent in July, much higher than expected, as energy and commodity prices continued to surge. The energy components of the CPI jumped up 59.2 percent (annualized rate) and are up 29.2 percent over the past 12 months. Consequently, the 12-month growth rate in the CPI stands at 5.6 percent, its largest increase in 17 years. The core CPI was also elevated in July, rising 4.0 percent, its largest monthly jump since November 2001. This followed a 3.9 percent increase in June. Measures of underlying inflation trends computed by the Federal Reserve Bank of Cleveland - the median CPI and 16 percent trimmed-mean CPI - rose 4.7 percent and 7.2 percent, respectively. Over the past three months, the 16 percent trimmed-mean CPI is up 5.5 percent, while the median CPI has increased 3.8 percent.

July Price Statistics

Percent change, last
1mo.a 3mo.a 6mo.a 12mo. 5yr.a 2007 avg.
Consumer Price Index
All items 13.4 10.6 6.4 5.6 3.6 4.2
Less food and energy 4.0 3.5 2.3 2.5 2.3 2.4
Medianb 4.7 3.8 3.1 3.3 2.8 3.1
16% trimmed meanb 7.2 5.5 4.0 3.6 2.7 2.8
Import Price Index
All commodities 22.7 34.3 30.9 21.7 8.9 3.6
Nonpetroleum imports 11.0 9.9 11.4 8.0 3.5 2.1
Export Price Index
All commodities 18.5 11.7 12.3 10.2 5.2 2.1
a. Annualized.
b. Calculated by the Federal Reserve Bank of Cleveland.
Sources: U.S. Department of Labor, Bureau of Labor Statistics; Federal Reserve Bank of Cleveland.

Import prices, which have been surging since March, rose 22.7 percent in July. This is a slight improvement from the past four months, which have all seen import price increases in excess of 39 percent. Both petroleum and nonpetroleum prices contributed to the overall price gain in July, rising 60.4 percent and 11.0 percent, respectively. Export prices remain elevated as well, rising 18.5 percent in July after a 13.2 percent increase in June. Over the past 12 months, export prices are up 10.2 percent, while import prices have jumped up 21.7 percent. Nonpetroleum imports have increased 8.0 percent over that same time period.

Import and Export Price Indexes

An investigation into the distribution of price changes in the components of the CPI yields some information about the nature of the price increases. In July, 60 percent of the components of the CPI rose at rates exceeding 3.0 percent, while 47 percent rose at rates greater than 5.0 percent, more than double the 2007 average of 22.4 percent rising at rate greater than 5.0 percent. On the other side of the price-change distribution, only 9.2 percent of the index's components exhibited price decreases in July, compared with 16.5 percent year-to-date, and an average of 20.7 percent in 2007.

CPI Component Price-Change Distributions

Core goods prices jumped up 5.6 percent in July (their largest monthly price spike since September 1999), which may indicate that energy and commodity prices are passing through into goods production. Core services prices - which are much more sensitive to wage pressures - were relatively well-behaved, rising 3.4 percent during the month.

Core CPI Goods and Core CPI Services

One-year-ahead average inflation expectations, as measured by the University of Michigan's Survey of Consumers, fell 0.8 percentage point to 5.5 percent in August, likely reflecting the recent decline in energy and commodity prices from near-term peaks. Longer-term (5 - 10 year-ahead) average expectations ticked up to 3.8 percent in August from 3.5 percent in July, holding slightly above their recent trend.

Household Inflation Expectations

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