Overview

Overall inflation in the United States has eased. Headline CPI increased at a 1.9 percent annualized rate from January through July. Under the hood, there has been a shift in relative prices. Core goods (which exclude food and energy) inflation has risen modestly, which has been more than offset by a decline in services inflation. Some commentators have been quick to attribute the increase in goods inflation to trade policy. However, placing the increase in an international context highlights the following facts:

• Core goods inflation has increased globally over the past 12 months.
• Even with the increase, core goods inflation in the United States remains at a low level (1.2 percent over the 12 months through July and 1.1 percent annualized since January). It’s also lower than in other countries.
• Based on core goods inflation in other countries this year, we would have expected core goods prices to have increased by more than they actually increased from January through July.

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