For the first time in more than two years, the Personal Consumption Expenditures Price Index — a federal measurement reflecting inflation — fell in July.
The index dropped by 0.1 percent on a month-to-month basis, meaning the fall reflects a change in prices from the preceding month. The index of inflation over the preceding 12 months, which compares prices to the level at which they stood last July, was at 6.3 percent last month, which is lower than the 6.8 percent rate of year-over-year inflation seen in June, although at the same level of year-over-year inflation rates seen in this index in April and May.
The month-to-month decrease in July was credited in large part to falls in prices for gas. On a month-to-month basis, there was a 4.8 percent drop in the price for energy goods and services in July, according to newly available federal numbers. The national average for a gallon of regular gas was $3.857 as of early Saturday. A month ago, it was $4.302, and it was even higher before that point. The overall month-to-month drop is the first in this inflation index since April 2020, according to MarketWatch. In June, the month-to-month rate was 1 percent.
The economic performance reflected by the July numbers beat expectations from economists polled by The Wall Street Journal, who anticipated no change in July in the month-to-month price levels reflected by the index. A version of the index that excludes food and energy costs went up by 0.1 percent on a month-to-month basis in July, although economists who were surveyed expected a 0.2 percent rise. Per MarketWatch, the Federal Reserve prioritizes the Personal Consumption Expenditures Price Index in examining inflation. Calculations that are behind the index take “into account how consumers change their behavior in response to higher prices,” the site says. The Federal Reserve embarked upon a series of interest rate hikes amid rising inflation in an attempt to push down demand. A bill recently signed by President Joe Biden that includes substantial levels of new federal support for the U.S. tech industry was characterized in part as set to help bring down costs because of boosting supplies of critical tech components known as semiconductor chips.