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WASHINGTON — Consumer prices climbed 2.9 percent in July from a year earlier, a rate of inflation that suggests Americans are earning less than a year ago despite an otherwise solid economy.

The Labor Department said Friday that the consumer price index ticked up 0.2 percent in July. Annual inflation matched the 2.9 percent pace from June, which had been the highest level since February 2012. Core prices, which exclude the volatile food and energy categories, rose 0.2 percent in June and 2.4 percent from a year earlier. Core prices have risen at the fastest annual pace since September 2008.

"For Americans to benefit more from the expansion, real wage growth needs to be positive as it usually is in this phase of an expansion," said Robert Frick, a corporate economist with Navy Federal Credit Union.

Most of July's increase in consumer prices came from higher housing costs. Prices for energy, medical care and apparel slipped in July, while food expenses rose slightly.

Adjusted for inflation, average weekly earnings have fallen 0.1 percent in the past 12 months.

During the past year, higher prices for oil, gasoline and transportation have caused the inflation rate to jump after it had hovered at relatively low levels for the previous six years. The sudden increase in prices has not only wiped out average growth, but it also creates pressure for the Federal Reserve to raise short-term interest rates so that inflation stays close to the U.S. central bank's 2 percent target.

The Fed has already raised rates twice this year and another two rate increases are expected before the start of 2019. By making it more expensive to borrow, the Fed would likely tamp down on inflation as well as economic growth, making it more difficult for President Donald Trump to achieve the sustained 3 percent gains in gross domestic product that he has promised voters.

Rising gasoline costs have complicated the inflation picture. Gas costs have surged 25.4 percent in the past year, but they tumbled 0.6 percent in July, which could mean that prices at the pump may be stabilizing.

Read Friday's Arkansas Democrat-Gazette for full details.

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  • RBear
    August 10, 2018 at 11:27 a.m.

    "For Americans to benefit more from the expansion, real wage growth needs to be positive as it usually is in this phase of an expansion," said Robert Frick, a corporate economist with Navy Federal Credit Union.
    And this is the point I and others have made about the need for raising the minimum wage. I know this flies over the heads of some on the right, but those impacted most by inflation are those who earn the least. Yet, right wingers consistently attack any minimum wage increases without even thinking through it. You want to see real economic expansion? Raise the minimum wage.

  • LRCrookAttorney
    August 10, 2018 at 2:49 p.m.

    The thing is RBear, if minimum wage is raised the economy will fluctuate to account for it. Everything that a minimum wage worker touches will slowly increase in price. Within two years of a minimum wage hike, the prices of items will increase and basically the increase will be wiped out. I always wondered why the prices of housing, back in the early 90s when I first got out of the service, increase so much between 92 and 98. An economist once explained that the huge increase, especially here in Arkansas, of two wage earners required an increase in cost of housing. Basically, the people (just example) with one wage earner of $75k+ didn't want the two earner households (where each earner made $37,500 per year, for household total income of $75k) to be able to live next to them.

  • BoudinMan
    August 10, 2018 at 4:25 p.m.

    But, but wait a gosh danged cotton picking minute. The president said wages are going up because of him, and by golly, wages are going up because of him. No matter what the facts say.

  • LRCrookAttorney
    August 10, 2018 at 5:26 p.m.

    boudin...Are you sitting there telling me that your boss didn't walk in and give you a pay raise? I have gotten two in the past year. I also was handed free healthcare, a card to pay my mortgage, car payment and for all the groceries (including eating out) as well as two free movie tickets every week and a free cell phone. It is amazing how much the gov't has started paying everything for me over the past 10 years.