The U.S. Consumer Price Index (CPI) rose 0.1% month-over-month in July, aligning with market expectations. Over the 12 months ending in July, the CPI increased by 3.4%, a modest decline from June's 3.5% reading. This data, released on August 10, shows a slight cooling of annual inflation, though persistently high price levels continue to fuel public dissatisfaction.
As the November 3 midterm elections approach, consumer sentiment on the economy remains weak. According to the U.S. Department of Labor, the CPI was up 3.4% year-over-year in July, marginally below June's 3.5% rate. Energy prices were broadly flat, and housing costs rose at a moderate pace. Data from the American Automobile Association (AAA) indicates the national average gasoline price is slightly above $4 per gallon, about 50 cents below its peak for the year. However, this is still nearly $1 higher than the same period last year. The U.S. and Israeli strikes on Iran in late February roiled global oil markets.
Bill Adams, Chief U.S. Economist at Fifth Third Bank, commented, "Despite the sharp rise in gasoline prices, financial markets are betting there is room for de-escalation in the conflict, which has curbed a more significant increase in oil prices." Adams noted that housing costs, which carry a heavy weight in the inflation index, have recently shown a slower growth trend. "An increase in housing supply, coupled with higher mortgage rates, is dampening buyer purchasing power, leading to a more moderate rise in national home prices."
Multiple factors, including higher energy costs, have driven up grocery prices. Over the past year, beef prices have risen 9.4%, while tomatoes and lettuce have surged 12.8% and 7.5%, respectively. Coffee prices soared last year, impacted by tariffs imposed by the Trump administration. After coffee was removed from the tariff list, prices fell slightly in June and July, but they were still 10.3% higher year-over-year in July. Overall, the CPI rose 0.1% month-over-month in July, but the annual inflation rate trended downward. The core CPI, which excludes volatile food and energy items to gauge underlying inflation trends, was up 2.5% year-over-year. Wednesday's data matched economists' expectations.
Inflation has now remained significantly above the Federal Reserve's 2% annual target for five consecutive years, putting the Republican Party in a difficult position in its public messaging ahead of the November 3 midterm elections. Many voters supported Trump last year, partly hoping he would repair the inflation-battered economy. However, his conflict with Iran has pushed up gasoline and food prices, eroding public support. A joint poll last month by The Washington Post and Ipsos found that 18% of Republican voters—nearly one in five—believe their personal finances have worsened since Trump began his second term. In contrast, during the same period of his first term (September 2018), that figure was only 4%.
Theresa Gibson, 68, lives in Whitesburg, Kentucky, and helps care for eight grandchildren. She is one of tens of millions of Americans receiving Social Security benefits. This year, her monthly benefit was adjusted upward by 2.8%, but that increase has lagged behind inflation. "This minor increase can't keep up with prices. Everything is more expensive," Gibson said. She used to buy Dove body wash but can no longer afford it regularly, opting for cheaper alternatives. "There are some things I just have to skip. The essentials come first. Sometimes I have to delay paying a bill for a month and figure it out the next. Every day is a financial struggle."
Those with 401(k) retirement accounts are in a relatively better position, but still feel the pinch of rising prices. Bob Murray, 70, a retired sales representative from Inver Grove Heights, Minnesota, whose wife still works as a nurse, said, "The stock market is up, but prices are up too. We're not wealthy, and we have to be very careful with every dollar." Murray gives Trump a low grade for his economic management and declined to reveal his voting choice for the election, fearing disagreement with family and friends. He said his wife deeply regrets her previous vote and has even gone to church to confess over it. "In short, the inflation is just crazy. I'd give him at best a C-minus to a D." The Trump administration acknowledges the problem of high food prices but blames former President Joe Biden.
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