The government’s Consumer Price Index shows year-over-year inflation declined 2.1%, cut down by sharply lower energy costs as compared to last year when gasoline prices were over $4 a gallon. July prices were also held in check by falling energy prices.
“In the months ahead, we expect U.S. consumer prices to soften further, and headline consumer price inflation to remain in negative territory (at least through to some time in the fall), before beginning to creep above zero as the expected economic recovery gathers traction,” Millan Mulraine, economics strategist with TD Securities, in a research note, was quoted on MarketWatch.
Core consumer prices, which exclude volatile food and energy costs, rose by 0.1 percent in July. The core CPI is up 1.5 percent over the past year, which is well within the Federal Reserve’s comfort zone of 1-2 percent.
Gold is often purchased as a hedge against inflation, and this morning’s report showing inflation under control, at least for the moment, was less than positive news for the yellow metal.
"Gold futures fell Friday and ended the week down for the first week in five, as U.S. consumer prices showed the sharpest year-over-year decline in nearly 60 years during July, reducing the precious metal’s appeal as a hedge against inflation," wrote Moming Zhou from MarketWatch.
New York gold futures for December delivery declined $7.80, or 0.8 percent, to $948.70 an ounce.
Consumer price figures in July
Several interesting price figures for July follow:
- Medical care rose 0.2% as they did in June and after a 0.3% increase in May
- Education and communication prices climbed 0.3% following a 0.2% rise in June
- New vehicles prices rose 0.5% after a 0.7% increase in June, a 0.5% gain in May, and a 0.4 % increase in April
- Energy prices fell 0.4% following a 7.4% increase in June
- Gasoline prices fell 0.8% after a 17.3% increase in June
- Electricity costs dropped by 0.6% following a 1.6% decline in June
US Inflation Calculator update
Using the most recent Consumer Price Index data, the CoinNews Inflation Calculator shows how consumer prices have changed over the years. By entering any two dates from 1913-2009 and then a dollar amount, the calculator measures the buying power of the dollar over time. Inflation over the years can be seen with these few calculator examples:
- An item purchased in 1913 for $1 would now cost $21.75
- An item purchased in 1950 for $10 would now cost $89.36
- An item purchased for $20 in 1985 would now cost $40.03
Mixed dates may also be used with the Inflation Calculator. As examples:
- An item purchased today for $500 would have cost $124.91 in 1975
- An item purchased for $1000 in 1980 would have cost $1,586.17 in 1990
Of course, not all "goods and services" rise or fall in tandem with inflation rates. For example, many computers when adjusted for inflation are actually less expensive today (and do more) compared to years ago.
Latest Charts on Inflation Rates
The CoinNews inflation page also includes two updated charts indicating the:
- Annual Averages for Rate of Inflation
- Annual Percent Changes for Rate of Inflation or Inflation Rates
While the Inflation Calculator is more of a general financial interest tool, specific numismatic calculators and tools may be found via the CoinNews menu: "COIN PRICING & COLLECTOR TOOLS".
The CoinNews sister site with the same US Inflation Calculator offers additional information on consumer prices and inflation rates.