The consumer price index rose the expected 0.1 percent, but significant troubles lie ahead. 
The BLS reports the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent on a seasonally adjusted basis in July after falling 0.4 percent in June, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment.
The BLS rounds to 1 decimal point. I show 2 decimal places
CPI Month-Over-Month
- All Items: 0.07 percent
- All Items Excluding Food and Energy: 0.22 percent
- Food and Beverage: 0.08 percent
- Shelter: 0.14 percent
- Owners’ Equivalent Rent: 0.26
- Rent of Primary Residence: 0.26
- Medical Care Services: 0.56 percent
- Medical Care Commodities: -0.61 percent
- Energy: -1.48 percent
- Gasoline: -2.86 percent
- Food at Home: 0.07 percent
- Food Away from Home: 0.31
CPI Month-Over-Month Energy, Gasoline, Utilities
Energy, Gasoline, Utilities and Fuel Month-Over-Month
- Energy: -1.48 percent
- Gasoline: -2.86 percent
- Utilities and Fuel: -0.01
Looking ahead, Trump’s moves in the strait will cause gasoline prices to jump up again.
CPI Month-Over-Month Shelter
July Shelter
- Rent of Primary Residence: 0.26 percent
- Owners’ Equivalent Rent: 0.26 percent
- Shelter: 0.14 percent
These numbers have been falling but they have mostly been range bound since December 2024with OER at 0.26 percent.
Annualized, that 0.26 percent is 3.17 percent. That’s not terrible compared to where things were but it is well above Fed target (not that the Fed can do anything about it).
Shelter at 0.14 percent is artificially low because of energy that won’t repeat big negative numbers that won’t repeat.
CPI Month-Over-Month Food
July Food
- Food and Beverage: 0.08 percent
- Food at Home: -0.07 percent
- Food Away from Home: 0.31 percent
The BLS weights food at home as 8.23 percent of the CPI. It weights food away from home at 5.29 percent of the CPI.
Actual spending is reversed. People spend more money eating out. If you don’t great, you are better off.
The second issue is the BLS does not count tips as part of the CPI at all. Thus the food and beverage percent is much higher every month than reported.
Five Measures of Inflation Year-Over-Year
Five Measures of Inflation Year-Over-Year
- CPI : 3.4 percent – Bottom April 2025 at 2.3 percent
- Core CPI: 2.5 percent – Bottom February 2026 at 2.46 percent
- CPI Rent: 2.8 percent – Bottom March 2026 at 2.56 percent
- PCE: 3.70 percent (June) – Bottom September 2024 at 2.26 percent
- Core PCE: 2.9 percent (June) – Bottom April 2025 at 2.61 percent
These are not great numbers yet they are negatively skewed for two months because of energy.
CPI Year-Over-Year Food
CPI Year-Over-Year Food Details
- Food and Beverage: 2.9 percent
- At Home: 2.7 percent
- Away from Home: 3.4 percent
Because the BLS underweights food at home and does not include tips at all, food and beverage at 2.9 percent is hugely understated.
Food is 13.52 percent of the CPI
Small Price to Pay
This is a small price to pay if you focus on the mission.
Q: What’s the mission?
A: Our mission is to return the strait to where it was before we started this war.
The mission is failing because Trump has no cards.
Why the Headline Number Not as Good at First Glance
- The price of oil and goods have bottomed because the strait is again closed.
- Food is understated in the CPI
- The CPI does not count property taxes, homeowner’s insurance, or home prices at all.
All inflation measures from the BLS and elsewhere are flat out wrong because of point three.
Economists wonder why people are more upset about inflation than what the numbers show.
That’s because they insist on stupid definitions of inflation that ignore point three totally and undercount both food and medical.
Looking Ahead
- The strait is again closed and the war is very unpopular.
- Trump is making more mistakes with tariffs and those costs have not shown up yet.
- Republicans will be hard pressed to pass any additional legislation.
- Gas prices heading back up won’t help Republican chances at the midterms.
- Housing remains dead.
- Deficits and debt are disasters.
- Trump wants more military spending.
Bond Market View
Today, despite another favorable CPI report, bond yields barely budged.
The long bond is an elevated 5.238 percent.
The bond market takeaway is the same as mine. This was not a particularly good report, but nor was it awful.
Looking ahead, there are a lot of troubles, not even counting deficits, debt, or military spending,
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August 10, 2026: Are Hourly Earnings Rising Too Slowly to Cause Inflation?
That’s the claim by two prominent names. I respectfully disagree.
CPI down let’s buy stonks! Econ-0my is fine and we can buy stonks. Bonds don’t matter. 30 yr at 5.25. Meh.
When mechanical flows exit good luck out there
What, me worry? Here’s a quote from the king himself last night:
“The country is doing well, prices are dropping fast, Iran is going absolutely fine, we control the Strait of Hormuz, and things are going great for our country!”
Why are people mad? It’s never been better! He’s done more for Gen Z than their own parents have! C’mon people, smile and vote red this November so we can keep WINNING BIG!!!!
https://xcancel.com/Acyn/status/2087356385029935346
Source just in case you don’t believe these incredible TRUTHS from our dearest and never ever incorrect or delusional (he’s very lusional actually!) leader. MAGA!!!!!!
he’s Kim il Don
cult and all
“Medical Care Services: 0.56 percent”
Does this include health insurance? My health insurance went up 15% this year and is slated to go up another 15% in 2027.
Extremely disgusted over this. I struggle to see how these costs are as low as they are.
Definitely understated
Mish, is this any different from any other administration’s stats or is it particularly egregious to the current President’s peeps? I recall being disgusted at every “inflation” report. Especially enraging is the substitution fraud play such as steak is expensive so let’s use 80% downer cow hamburger for the numbers.
These numbers are goal-seeked BS. Inflation is significantly higher than what they are reporting.
Only if you’re not measuring it with a stupid and out of date system that hinges on alchemy with numbers to work. For the rest of us, stock market number go up, whee!!
Home sale exemption big if true…
The first is indexing capital gains to inflation, so investors would be taxed only on real gains rather than on the portion of an increase that simply reflects the dollar losing value. The second is exempting home sales of $2 million or less from capital gains taxes entirely.
0% chance