Consumer Price Index Rises Just 0.1% in July; Inventories Stable
WASHINGTON — Consumer prices rose a scant 0.1% in July, the Labor Department said Friday, adding to overwhelming evidence that inflation is being tamed by weak economic expansion.
In a separate but related release, the Commerce Department reported that business inventories rose a meager 0.2% in June, the ninth consecutive monthly increase, but were held in check by a 0.4% increase in sales.
The department said the modest increase in the consumer price index reflected flat inflation in many sectors following unchanged inflation in June and a small increase in May.
“It’s as good as it gets on the inflation side,” said David Jones of Aubrey G. Lanston & Co.
In the greater Los Angeles area, prices paid for goods and services rose by a similar 0.1% last month, according to the department. The greater Los Angeles area includes Los Angeles, Orange, Riverside, San Bernardino and Ventura counties.
The CPI figure beat Wall Street estimates of a 0.2% increase.
When the volatile food and energy sectors are excluded, consumer prices showed a 0.1% rise, following an identical increase in June.
The new inflation figure follows a 0.2% decline in July wholesale prices, released Thursday, after a 0.3% fall in June, the first back-to-back decline in two years.
Analysts said the figures show that prices are being kept in check by companies and families worried about debt and a still weak job market.
“There is just not enough demand to support price increases,” said Cynthia Latta of DRI/McGraw-Hill Inc.
There was no indication that prices at the consumer level in July were affected by the devastating Midwest floods, although analysts expect increases in food prices because of flooded fields and crop damage.
The list of sectors showing little inflationary pressure included food and beverages, housing, energy and apparel. Entertainment showed a decline.
Even medical care showed only a modest increase, 0.4%, following an identical increase in June. Tuition and education costs also showed a 0.4% increase.
Meanwhile, the Commerce Department said inventories totaled a seasonally adjusted $865.6 billion, up from $864.2 billion in May. Inventories also rose 0.2% in May.
The report says sales totaled a seasonally adjusted $590.5 billion, up from $587.9 billion in May and the third straight increase.
The increase in sales helped keep the inventories-to-sales ratio at 1.47 for the fourth month in a row. The ratio means that it would take 1.47 months to exhaust stockpiles at the June sales pace. Analysts do not consider that level to be ominous.
In another related release, the Labor Department reported that consumers gained buying power in July as U.S. weekly earnings, adjusted for inflation, increased 0.4%.
The increase stemmed from a 0.2% rise in average hourly earnings and a 0.3% advance in average weekly hours worked, partly offset by a 0.1% increase in the cost of living last month.
Employees are putting in longer workweeks because many companies are pressuring them to work more overtime so the companies don’t have to hire employees.
Average weekly earnings rose 3% between July, 1992, and last month as a result of a 2.4% increase in average hourly earnings and a 0.6% increase in average weekly hours worked.
More to Read
Inside the business of entertainment
The Wide Shot brings you news, analysis and insights on everything from streaming wars to production — and what it all means for the future.
You may occasionally receive promotional content from the Los Angeles Times.