Higher Apparel Prices Push Core Inflation Higher in July

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August 14, 2008 (Prices Byte)

Higher Apparel Prices Push Core Inflation Higher in July

Prices Byte by Dean Baker

For Immediate Release: August 14, 2008
Contact: Alan Barber, (202) 293-5380 x115

"The annual rate of inflation in the CPI has been 10.6 percent over the last quarter."

The core CPI rose 0.3 percent in July, as a 1.2 percent jump in apparel prices, coupled with unusually large increases in communication and recreation prices led to a larger than expected increase. The core index has now increased at a 3.5 percent annual rate over the last quarter, up from a 2.5 percent rate over the last year.

The overall CPI increased by 0.8 percent in July. It has risen at an extraordinary 10.6 percent rate over the last quarter, compared with a 5.6 percent rate over the last year. A 4.0 percent jump in energy prices was the biggest factor pushing up the core index, but food prices also rose by 0.9 percent.

The jump in apparel prices is not surprising, given the extraordinary increases in import prices in recent months. The July increase undoubtedly overstates the true rate of inflation, but the years of falling apparel prices are over.

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