Even if it included positive news for the Fed, the July inflation report was harder for the Biden administration to brag about, given the pickup in the headline number. President Biden noted that the overall inflation rate had fallen since last summer, and highlighted the decline in core inflation in July.
“Today’s report shows that our economy remains strong,” he said in a statement.
The Republican National Committee pointed out the uptick in overall inflation in July, and said in a statement that the rate “remains more than double what it was when Biden took office.”
There is a risk that the overall inflation gauge could stay higher into August. Gas prices began to pick up at the end of July. Although the jump came too late to matter much for that month’s report, it has persisted into August and could prop up inflation in the next set of figures.
But Paul Ashworth, the chief North America economist at Capital Economics, wrote that “other than triggering a rebound in airline fares via higher jet fuel prices, we expect the knock-on impact” of higher fuel costs “to be pretty modest.”
Still, a big question about the future evolution of inflation lingers: Can it slow sustainably without a more marked pullback in the broader economy? So far, consumers continue to spend, wages continue to rise, and the job market remains strong despite the Fed’s rate moves, all of which might keep demand strong and prices increasing.