•Press Release
August 15, 2007
Prices Byte by Dean Baker
For Immediate Release: August 15, 2007
Contact: Alan Barber, (202) 293-5380 x115
The core CPI, excluding owner occupied housing, rose at a 2.8 percent rate in the quarter.
The overall CPI rose by just 0.1 percent in July, as a 1.0 percent drop in energy prices held down the overall rate of inflation. The core (excluding food and energy) rate of inflation was 0.2 percent for the second consecutive month. The annual inflation rate over the last quarter in the overall CPI has been 4.0 percent. This is up from a 2.4 percent rate over the last year, and just about even with the rate of wage growth over the last quarter, meaning that real wages have been flat. The core inflation rate over the quarter has been 2.5 percent, up slightly from the 2.2 percent rate over the last year.
Housing continues to be an important factor holding down the core rate of inflation. The owners’ equivalent rent (OER) component, which accounts for 30 percent of the core index, has increased at just a 1.8 percent rate over the last quarter. Excluding OER, the core inflation rate was 2.8 percent over the last quarter. The rent proper index showed a somewhat higher 3.3 percent rate of increase over the quarter, but this index is pushed up by the cost of utilities that are included with rent.
The one component showing a big jump in July was medical care costs, which rose by 0.6 percent. Part of this increase is attributable to an unusually low 0.2 percent reported rise in June. Medical care costs have risen at a 4.8 percent annual rate over the last quarter, which is only slightly higher than the 4.3 percent rate of increase over the last year.
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