Inflation held steady at 2.7% in July as food and energy prices remained subdued and offset increases in service prices, according to the latest Bureau of Labor Statistics (BLS) report. Core inflation, which excludes volatile food and energy, picked up its largest monthly increase since January and fastest annual pace since February.

During the past 12 months, on a non-seasonally adjusted basis, the Consumer Price Index (CPI) rose by 2.7% in July, unchanged from June and the highest since February 2025. Excluding the volatile food and energy components, the “core” CPI increased by 3.1% over the past 12 months. A large portion of the “core” CPI is the housing shelter index, which increased 3.7% over the year — the lowest reading since October 2021. Meanwhile, the component index of food rose by 2.9%, and the energy component index fell by 1.6%.

On a monthly basis, the CPI rose by 0.2% in July (seasonally adjusted) after a 0.3% increase in June. The “core” CPI increased by 0.3% in July. 

The index for shelter continued to be the largest contributor to the monthly increase. This index constitutes more than 40% of the “core” CPI, rising by 0.2% in July, following the same increase last month.

Other top indexes that rose in July include:

• Medical care (+3.5%),
• Airline fares (+4.0%),
• Recreation (+0.4%),
• Household furnishings and operation (+3.4%), and
• Used cars and trucks (+0.5%).

Meanwhile, the index for lodging away from home (-1.0%) and communication (-0.3%) were among the few major indexes that decreased over the month.

Fan-Yu Kuo, NAHB Senior Economist, Forecasting & Analysis, provides more details in this Eye on Housing post.