Econotics

Key Takeaways

US inflation fell to 2.9% in July 2024, its lowest since March 2021, driven by slower increases in shelter, transportation, and apparel costs. Core inflation also eased to 3.2%, with shelter contributing significantly to the monthly CPI rise.

In July 2024, the US inflation rate slowed for the fourth month, dropping to 2.9%—its lowest level since March 2021. This slightly decreased from June's 3% and below the expected 3%.

The slowdown was primarily driven by lower inflation in shelter (5.1% down from 5.2%), transportation (8.8% down from 9.4%), and apparel (0.2% down from 0.8%). Additionally, prices continued to decline for new vehicles (-1% down from -0.9%) and used cars and trucks (-10.9% down from -10.1%). Food inflation held steady at 2.2%.

However, energy costs saw a slight uptick, rising by 1.1% compared to 1% in June, with gasoline prices declining less sharply (-2.2% vs. -2.5%). On a month-to-month basis, the Consumer Price Index (CPI) increased by 0.2%, bouncing back from a 0.1% drop in June and matching forecasts. The rise in shelter costs, up by 0.4%, accounted for nearly 90% of the monthly increase.

Meanwhile, core inflation, which excludes food and energy, also slowed for the fourth consecutive month, reaching 3.2%—the lowest since April 2021, down from 3.3% in June. The monthly core inflation rate increased to 0.2% from 0.1%, aligning with expectations.