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A Slow and Uneven Recovery Still Likely Despite July’s U.S. Price Bounce

Tiffany Wilding, North America Economist, PIMCO | A rebound in prices across travel and leisure categories in July 2020 drove the largest increase in core U.S. inflation since January 1991, with the core Consumer Price Index (CPI) increasing 0.6% month-over-month (m/m). This was enough to boost the year-over-year (y/y) rate to 1.57% as of July, up from 1.19% as of June, despite expectations for a further drop amid the economic challenges posed by COVID-19. The sectors hit hardest by the crisis were the same categories that led prices higher in July. Shelter price inflation also rebounded.