July’s CPI increased 0.5% vs. June and 5.4% vs. a year ago with reopening-sensitive categories slowing down and driving the smallest amount of the overall increase since March. Notably, prices for used cars and trucks, the biggest contributor to June’s increase, were effectively flat through July (though still elevated from the prior month’s increases). This helped slow down core prices, which increased at a 0.3% monthly rate, compared to June’s 0.9%. Pent-up vacation demand caused lodging prices to rise 6.0%, slightly lower than June’s 7.0% increase, and causing lodging and rent prices to contribute to roughly half of the core CPI figure.
The $550 billion infrastructure plan, boosting spending on bridges, roads, and rail, passed the Senate and was sent to the House, where its prospects are a bit muddier as Speaker Pelosi has mentioned that the bill will only get through the House in coordination with the $3.5 trillion budget, which includes provisions on climate change, the safety net, and taxes on higher-income individuals and corporations.
The delta variant continues to stir up problems with reports of dwindling hospital beds in parts of the country as well as China partially shut down the world’s third busiest port, risking additional disruptions in global supply chains.