Don’t be fooled by the uptick in year-over-year inflation from 3.0% in June to 3.2% in July. Inflation is slowing, and doing so across a broader range of goods and services.
Monthly inflation has been 0.2% or lower for three consecutive months. Previously, 1-month dips had not been sustained.
Annualized, inflation was 2.52% on a 6-month basis, 1.89% on a 3-month basis, and 2.00% on a 1-month basis.
The trend in core inflation was even more encouraging—4.00% on a 6-month basis, 3.01% on a 3-month basis, and 1.91% on a 1-month basis.
Thanks to recent disinflation, wages are growing faster than prices. As workers see their purchasing power increase, expect to see consumer spending continue to grow and the labor market remain resilient.