Inflation Was Less…Inflated: August 8 – 12

Headline inflation measures reflect relief at the gas pump. Here are the five things we learned from U.S. economic data released during the week ending August 12. 


Rapidly declining gas prices pulled overall inflation to zero in July. The Consumer Price Index (CPI) held steady on a seasonally adjusted basis during the month, the first time the Bureau of Labor Statistics measure failed to increase since November 2020. CPI has surged 8.5 percent over the past year. Gasoline prices plummeted by 7.6 percent—that along with an 11.0 percent drop in fuel oil prices had energy CPI down 4.6 percent. (Even with the decline, gasoline CPI remained a whopping 44.0 percent above year-ago levels, with the energy index’s 12-month comparable at +32.9 percent). Meanwhile, food prices continue rising, up 1.1 percent, matching similar gains each month this year. Food prices were 10.9 percent ahead of year-ago levels. Net of energy and food, core CPI grew 0.3 percent (its smallest gain since March) and has risen 5.9 percent over the past year. Prices grew for new vehicles (+0.6 percent), medical care commodities (+0.6 percent), shelter (+0.5 percent), and medical care services (+0.4 percent). Prices for used cars/trucks (-0.4 percent) and apparel (-0.1 percent) declined. 

Wholesale prices fell in July. The Bureau of Labor Statistics estimates the Producer Price Index (PPI) for final demand declined a seasonally adjusted 0.5 percent, its first decline since April 2020. Net of energy, food, trade services, core PPI increased 0.2 percent in July (its smallest gain since February). PPI for goods dropped 1.8 percent, primarily due to freefalling gasoline prices (-16.7 percent) pulling down energy PPI (-9.0 percent). Food CPI rose 1.0 percent (chicken egg prices surged 43.1 percent). Services PPI advanced 0.3 percent. Even with the decline, PPI has risen 9.8 percent over the past year, with the core wholesale price measure up 5.8 percent from July 2021.

Consumer sentiment improved “very slightly” in early August. The University of Michigan’s Index of Consumer Sentiment added 3.6 points to a seasonally adjusted 55.1 (1966Q1=100). The measure remained 15.2 points below year-ago levels and was around five points above the record-low reading achieved in June. The expectations index rose by 7.6 points to 54.9 (August 2021: 65.1), while the current conditions index lost 2.6 points to 55.5 (August 2021: 78.5). The press release noted that median inflation expectations had declined a bit with anticipated prices only rising 5.0 percent over the next year. 

Prices tempered small business owner optimism in July. The Small Business Optimism Index edged up 4/10ths of a point to 89.9 (1986 =100). The National Federation of Independent Business measure has failed to top 100.0 for 20 consecutive months. Only four of ten index components improved during the month, led by a significant increase in expectations for the economy (although a net -52 percent of survey respondents remain pessimistic about business prospects). The press release noted that “historic inflation, labor shortages, and supply chain disruptions” are leading to “climbing” uncertainty.  

Wholesale inventories and sales swelled in June. Merchant wholesaler inventories expanded 1.8 percent to a seasonally adjusted $895.4 billion. The Census Bureau measure has grown 25.5 percent over the past year. Inventories for durable and nondurable goods swelled 2.0 percent and 1.4 percent, respectively, during the month. Wholesaler sales rose 1.8 percent to a seasonally adjusted $709.6 billion, up 20.4 percent from a year earlier. Durable and nondurable goods sales increased 0.7 percent and 2.7 percent, respectively. The inventories-to-sales (I/S) ratio held steady at 1.26 (June 2021: 1.21). The durable goods ratio added two basis points to 1.67, while the nondurable goods measure shed a basis point to 0.92.  

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending August 6, 2022, First-Time Claims, seasonally adjusted): 262,000, +14,000 vs. the previous week, -154,000 vs. the same week a year earlier). 4-week moving average: 252,000 (-39.5% vs. the same week a year earlier). 
  • Import Prices (July 2022, All Imports, not seasonally adjusted): -1.4% vs. June 2022; +8.8% vs. July 2021. Nonfuel Imports: -0.5% vs. June 2022; +4.1% vs. July 2021. 
  • Export Prices (July 2022, All Exports, not seasonally adjusted): -3.3% vs. June 2022; +13.1% vs. July 2021. Nonagricultural Exports: -3.3% vs. June 2022; +13.1% vs. July 2021. 
  • Productivity (2022Q2-preliminary, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): -4.6% vs. 2022Q1; -2.5% vs. 2021Q2.
  • Mortgage Delinquencies (2022Q2, Delinquency Rate for Mortgage Loans on One-to-Four Residential Properties, seasonally adjusted): 3.64% (-47 basis points vs. 2022Q1; -183 basis points vs. 2021Q2).  
  • Monthly Treasury Statement (July 2022, FY22 Federal Budget Deficit Through July): -$726.1 billion (vs. FY21 to date: -$2.540 trillion). 

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

Comments are closed.

Blog at

Up ↑

%d bloggers like this: