By Josh Mitchell and Sarah Chaney
WASHINGTON--Inflation picked up modestly in July, eating up Americans' wage gains.
The consumer-price index--a broad measure of Americans' living expenses, from groceries to dental care--rose 0.2% from a month earlier, the Labor Department said Friday. Excluding food and energy components, so-called core prices rose 0.2% as well.
The increases fell in line with economists' expectations.
Overall prices have climbed 2.9% over the past year, near the biggest gains of the expansion. Core prices increased 2.4%, the biggest 12-month gain since September 2008.
The report suggests inflation is steadily, but not rapidly, increasing as the economy heats up. The latest gain is likely to reassure the Federal Reserve as it considers raising interest rates--it has penciled in two more increases for this year---to keep the economy on an even kiel.
But the higher prices also mean Americans' are losing purchasing power. A separate report released Friday showed average hourly earnings were flat in July, and average weekly earnings fell 0.2%.
Over the past year, average hourly earnings have fallen 0.2% while weekly earnings have climbed 0.1%.
The weak growth in earnings, relative to inflation, could constrain Americans' ability to spend and thus weigh on the broader economy.
Higher housing costs drove last month's gain in overall prices. A rise in so-called shelter costs--reflecting rent and mortgage costs--accounted for 60% of last month's gain in the overall index.
Broadly, most consumer prices are rising over the past year. Energy prices have climbed 12.1% over the past 12 months, driven by higher gasoline costs.
The inflation outlook is cloudy. Tariffs imposed by the Trump administration could push up inflation. But a rise in the dollar could weigh on it.
The Labor Department's report on consumer prices can be found at: http://www.bls.gov/news.release/pdf/cpi.pdf
Write to Josh Mitchell at firstname.lastname@example.org and Sarah Chaney at email@example.com.
(END) Dow Jones Newswires
August 10, 2018 08:45 ET (12:45 GMT)
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