The cost of U.S. consumer goods barely increased in July, as signs of inflation within the recovering economy remained hard to find.
The Labor Department reported Tuesday that its Consumer Price Index (CPI) rose just 0.1 percent in July, as items across the board saw their smallest price gains since February. That low figure largely fell in line with economist expectations.
Some economists said that although overall signs for the economy appear positive, the slow growth in prices shows businesses are still a bit reluctant to push for higher costs as the economy still regains its feet years after the financial collapse.
“Inflation is not accelerating. Core prices have been increasing at a steady 0.1 to 0.2 percent monthly pace for years. Wage pressures remain soft, profit margins are solid, and businesses are reluctant to raise prices given still-recovering demand,” said Stuart Hoffman, chief economist at PNC, in response to Tuesday’s report.
The slow price growth is driving expectations in some corners that the Federal Reserve will not be in a big hurry to begin raising interest rates after years of near-zero rates.
The central bank has said its target inflation rate is two percent, but the Fed’s preferred way of measuring inflation actually has been tracking somewhat lower than the CPI.
Fed Chairwoman Janet Yellen has said the Fed is prepared to move more quickly on rates if price increases accelerate, but at the same time downplayed a recent uptick in inflation earlier this summer as a temporary matter.
Food prices were up 0.4 percent in July, compared to a 0.3 percent decline in energy costs. Shelter costs were up 0.3 percent, as both renters and owners paid more for their housing. But costs for airline travel fell significantly, dropping 5.9 percent after posting a 10.9 percent gain in the last five months. The costs of buying tobacco and used cars were also categories that saw a price decline in July.