PREVIEW: What to Look for in the July Consumer Price Index

08/09/2021 12:00am

(The monthly Consumer Price Index (CPI) is scheduled for release by the Bureau of Labor Statistics on Wednesday, August 11th at 8:30 AM Eastern Time.)

We saw a big jump in prices in many areas in June, which was obviously the result of disruptions associated with the rapid reopening and/or catch up from price drops at the start of the pandemic. The most important of these were the increases in new and used vehicle prices, which rose 2.0 percent and 10.5 percent in June, respectively. Over the year, these prices are now up 5.3 percent and 45.2 percent.

There is some evidence that the car market may be getting closer to normal. While manufacturers are still facing a shortage of semiconductors, they have been able to increase production. There also is evidence that prices in the used car market are now falling slightly. Look for prices to at least stabilize in July, if not actually decline.

Some of the other areas where we saw unusual price increases include laundry equipment, with prices rising 3.5 percent in June, and are now up 29.4 percent year-over-year.

The price of televisions rose 2.2 percent in June. They are up 7.6 percent over the last year. The index for car and truck rentals rose 12.0 in June, up by 87.7 percent from the year-ago level.

These components are each a relatively small share of the index, but their extraordinary price increases over the last year have been large enough to have a measurable effect on the CPI. With these prices likely reversing in the months ahead, they should be an important factor dampening inflation.

CEPR produces same-day analyses of government data on inflation, employment, GDP and other topics. 
Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.

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