Photo taken in San Francisco, United States

Key takeaways

  • The Consumer Price Index for All Urban Consumers (CPI-U) observed a 0.2% rise on a seasonally adjusted basis, the same increase seen in June.
  • In the last 12 months, CPI has increased by 3.2%, drastically down from its peak of 9.1% in June of last year.
  • Shelter had the largest impact, contributing 90% of the increase.

Contributors

Elana Dure

Editorial staff, J.P. Morgan Wealth Management

 

The Consumer Price Index for All Urban Consumers (CPI-U) is an essential tool that gauges the average change in prices over time that consumers pay for a basket of goods and services. In July, the CPI-U observed a 0.2% rise on a seasonally adjusted basis, mirroring the same increment as in June.1 On a year-over-year basis, the all-items index saw an increase of 3.2% before seasonal adjustment. This is slightly higher than June’s 3% year-over-year rise, though the uptick in July is partially due to base effects.2

Sarah Stillpass, a Global Investment Strategist at J.P. Morgan, noted how the increase was generally expected.

“July’s CPI report may have shown that headline prices increased for the first time in a year, but that was to be expected given the rise in energy prices from their lows last year,” said Stillpass.

Undoubtedly, the most significant influence on the monthly all-items increase was the index for shelter. It was responsible for more than 90% of the hike, underscoring its significant weight in the consumer basket.

While shelter contributed more than 90% of the increase, Sarah mentioned that the rate of rent growth is slowing. “Rents experienced the slowest year-over-year pace of growth since late 2022,” said Stillpass.

The index for motor vehicle insurance was the second-largest driver of price increases, which increased 2%, an acceleration from June’s 1.7% reading.

The food sector observed some intriguing shifts in July. Overall, the food index registered a 0.2% growth, a slight jump from the 0.1% increase the month prior. The index for food consumed at home marked a 0.3% rise over the month. Meanwhile, food away from home, which captures data on restaurant meals, takeout and fast food, saw its index go up by 0.2% in July.

In terms of energy, there was a mild rise in its index by 0.1% in July, moderating from the 0.6% increase witnessed in June. A closer examination reveals that the gasoline index, a significant portion of the energy basket, rose by 0.2% in July, decelerating from its 1% surge the preceding month. It's pivotal to note that despite these recent hikes, the energy index plummeted 12.5% over the past year, bringing down headline inflation significantly.

Excluding food and energy, the largest influence on the monthly CPI-U increase was, once again, the shelter index. A spotlight on other rising indexes for July showcases the motor vehicle insurance index, which surged by a notable 2%, building on its 1.7% increase from June.

On the flip side, not all indexes rose in July. Several declined, with the most prominent drop being the airline fares index. It slumped by a staggering 8.1% during the month, marking its fourth consecutive monthly drop. The continued descent in airfare shows the surge of “revenge travel” after the pandemic ended is moderating back to something close to normal. Similarly, the index for used cars and trucks dipped by 1.3% in July, furthering its decline from a 0.5% decrease in June. Other indexes that receded in July included areas like medical care and communication.

While the rise in the overall index was shaped dominantly by the shelter segment, sectors like food observed modest increases. Energy, despite its recent rises, remains notably lower on a yearly scale. Divergent trends in sectors like motor vehicle insurance, which saw hikes, versus airline fares and used vehicles, which experienced declines, reflect the multifaceted and dynamic nature of consumer behavior and market conditions post-pandemic.

Regarding the impact of the print, Stillpass said that this was a welcome print though there is still room for improvement.

“The bottom line is that this is a welcome print even if we did not see meaningful moderation like we did with the June CPI surprising to the downside,” said Stillpass. “While there was an uptick in the headline rate to 3.2%, under the hood, we can see that core inflation is falling and there is room for continued moderation in areas like shelter.”

References

1.

U.S. Bureau of Labor Statistics, “Consumer Price Index Summary.” (August 8, 2023).

2.

The Conference Board, “July CPI Shows Continued Progress on Inflation.” (August 8, 2023).

IMPORTANT INFORMATION

This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.

GENERAL RISKS & CONSIDERATIONS. Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.

NON-RELIANCE. Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

Legal Entity and Regulatory Information.

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.

J.P. Morgan may hold a position for itself or our other clients which may not be consistent with the information, opinions, estimates, investment strategies or views expressed in this document.  JPMorgan Chase & Co. or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer.

Check the background of our firm and investment professionals on FINRA's BrokerCheck

To learn more about J. P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our J.P. Morgan Securities LLC Form CRS and Guide to Investment Services and Brokerage Products.

This website is for informational purposes only, and not an offer, recommendation or solicitation of any product, strategy service or transaction. Any views, strategies or products discussed on this site may not be appropriate or suitable for all individuals and are subject to risks. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor's own situation. 

This website provides information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC ("JPMS"). When JPMS acts as a broker-dealer, a client's relationship with us and our duties to the client will be different in some important ways than a client's relationship with us and our duties to the client when we are acting as an investment advisor. A client should carefully read the agreements and disclosures received (including our Form ADV disclosure brochure, if and when applicable) in connection with our provision of services for important information about the capacity in which we will be acting.

INVESTMENT AND INSURANCE PRODUCTS ARE:
• NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Please read additional Important Information in conjunction with these pages.