Cost of Living

August 2017

Consumer Price Index (CPI)

Consumer prices in the United States increased by1.7 percent year-on-year in July of 2017 (Consumer Price Index for All Urban Consumers CPI-U), above the 1.6 percent increase in June. The July number missed market expectations of 1.8 percent. For the month, the index increased 0.1 percent prior to seasonal adjustment (missing market expectations of 0.2 percent). 

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.6 percent over the last 12 months (Consumer Price Index for Urban Wage Earners and Clerical Workers). 

Core inflation rate for CPI-U, which excludes prices of food and energy, remained at a two-year low of 1.7 percent in July of 2017.

Year to year changes in energy increased to 3.4%, a change of 1.1 percentage points from June 2017. Prices rose in such items as food (1.1 percent from 0.9 percent in June), medical care commodities (3.7 percent from 3.2 percent), and transportation services (3.2 percent from 3.1 percent). Meanwhile, inflation slowed for medical care services (2.3 percent from 2.5 percent in June) and shelter (3.2 percent from 3.3 percent).  See Consumer Price Index, selected categories. 

Overall, it appears that the rate of inflation (as measured by the CPI) is slowing down as compared to earlier year to year change in inflation – from January 2017 to April 2017 (see year to year changes). Looking forward, inflation is predicted to remain low in the near future.  According to the Survey of Professional Forecasters, the inflation rate is expected to average 2.3 percent in 2017 and 2018, and rise to 2.4 by 2019. Over the next 10 years, 2017 to 2026, inflation will average 2.3 percent.  

In comparison to the current low unemployment rate (lowest in 16 years), the fear of high inflation due to wage pressure seems unwarranted. 

Source:  U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index Release

Updated 8/17/17 by IAM&AW Strategic Resources Department

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