Inflation rose to 3.2% in July, rising slightly from the previous month, according to the Consumer Price Index (CPI) released by the Bureau of Labor Statistics (BLS).
In July, inflation was above the annual inflation rate of 3% in June, and it increased 0.2% on a monthly basis, according to BLS.
The cost of housing was the most significant contributor to the monthly increase in July, accounting for over 90% of the rise. The price of food increased by 0.2% in July after increasing 0.1% the previous month.
July's CPI showed that inflation stubbornly held steady above the Fed's 2% target rate. In July, Federal Reserve Chairman Jerome Powell said that the central bank remained committed to reaching the goal and signaled the possibility of further interest rate hikes this year.
Powell said that the challenge at the time, as inflation showed signs of easing, was to balance the risk of doing too little or too much.
"As our stance becomes more restrictive and inflation moderates, that risk is bigger," Powell said.
The central bank has already raised rates 11 times in 2022 and 2023 in its attempt to bring inflation down to the target rate.
"While core CPI is showing signs of slower trend growth, future progress in the fight against inflation will be harder, not easier," Morning Consult Chief Economist John Leer said in a statement. "Housing demand remains resilient despite higher borrowing costs, and there are good reasons to believe housing inflation will accelerate once again by the end of the year.
"The longer inflation remains elevated, the more entrenched it becomes," Leer continued. The question we should all be asking is how long the Fed is willing to accept core inflation above 4%. My sense is that their tolerance is pretty low, meaning that we shouldn't expect rate cuts this year."
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Social Security beneficiaries could see a 3% increase in their monthly checks next year, according to The Senior Citizens League (TSCL). A cost of living adjustment (COLA) of 3% would raise an average monthly benefit of $1,789.00 by roughly $53.70.
July CPI data is essential because the COLA is calculated based on inflation during the third quarter, according to TSCL. Inflation for July, August, and September are added together and averaged, then compared with the third quarter average from one year ago. The percentage difference between the two is the amount of the COLA, which would be paid to Social Security recipients beginning in January 2024.
In 2023, Social Security recipients received the highest COLA in more than 40 years, but 79% of retirees said that inflation and rising prices still affect their household budgets, according to results from a recent survey by TSCL.
For example, rising costs is why 66% said that increasing costs meant they had to postpone or go without dental care, including major services such as bridges, dentures and implants. Forty-three percent delayed eye exams or getting prescription eyeglasses. Almost one-third said they postponed getting medical care or filling prescriptions due to deductibles, out-of-pocket costs, and unexpected bills.
"Persistent high prices aren't the only problem," TSCL said in a statement. "Findings from the new survey suggest more than one in five Social Security beneficiaries (23%) report they paid tax on a portion of their benefits for the first time this past tax season. The tax return for 2022 reflected a 5.9% COLA increase in Social Security benefits.
"We expect the number who pay tax on a portion of their Social Security benefits to jump even more as next year's tax season reflects the 8.7% COLA increase in 2023," TSCL continued.
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Car insurance prices surged 2% in July after rising 1.7% in June. Inflation and rising costs across all sectors have made absorbing higher premiums more challenging for drivers, pushing some to go without, a recent Policygenius survey said.
Increased costs are why 45% of insured drivers aged 18 to 34 considered driving without car insurance in the past year, and 17% went without it, the Policygenius survey said.
"Our survey found that people are changing their behaviors, and sometimes even going so far as to take a major financial risk by driving completely uninsured," Andrew Hurst, Policygenius licensed property and casualty insurance expert, said in a statement. "Car insurance is getting expensive for most people, but there are ways you can make your insurance more affordable.
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