U.S. inflation rose a moderate 0.1% in July

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in July on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, this ‘headline’ inflation rate increased 2.0%.

The 0.1% number matched the consensus estimate and broke a four-month string of 0.2%-or-higher monthly increases. Today’s inflation report was a mixed bag – food prices increased a sharp 0.4% in July, but where offset by a 0.3% decline in energy costs, including gasoline. New vehicle prices were up 0.3%, but used vehicle prices declined by the same amount.

Holders of Treasury Inflation-Protected Securities and I Bonds are also interested in the non-seasonally adjusted CPI-U, which is used to adjust the principal on TIPS and set the future inflation-adjusted interest rate on I Bonds. In July, the non-seasonally adjusted inflation index declined slightly to 238.250, down 0.04% from the June index.

I have updated my Tracking Inflation and I Bonds page to reflect the new July number. With two months of inflation numbers remaining, the I Bond inflation-adjusted interest rate would reset to an annualized 1.64% on Nov. 1. But remember, two months remain.

Here is the one-year trend in CPI-U, which still shows a bump in the inflation in recent months:

2014 inflation

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