On CNN This Morning’s Thursday program, anchor Victor Blackwell brought CNN business correspondent Rahel Solomon on the show to discuss the July inflation report. Amid much praise of how well the economy had purportedly been doing, Solomon emphasized the “moderating inflation picture” in comparison with past months, and the “core inflation” that removed some of the most relevant factors, such as the cost of energy and food, from the final number to bring it to a place that looked better.
Solomon began her praise of the “nuanced inflation report” with a disclaimer that “at face value it actually looks like an acceleration,” but quickly proceeded to “put this in context.” She related the “headline inflation” to “what inflation was doing a year ago,” since this comparison would obviously make the new percentages look good.
She then made this comparison on a monthly chart that showed that “inflation held steady at 0.2 percent on a monthly basis.”
Then, Solomon discussed how they came to their numbers with “core inflation”:
When you look at, sort of, core inflation, which strips away categories like energy, which can be volatile, or food, which can be really volatile, that also remained steady at 0.2 percent on a monthly basis. On an annual basis, that came in at 4.7 percent.
So apparently things like food and energy weren’t important enough to include in this number, for they were deemed too “volatile” to include, i.e. the facts make the number look bad, so we’re leaving them out.
This very thing was also mentioned during the next hour in CNN News Central, where CNN business and politics correspondent Vanessa Yurkevich played this off as relatively unimportant by her dismissive tone while flippantly commenting on “core inflation, which strips away volatile fields, like food and energy.”
After giving all this seemingly good news, Solomon then showed the statistics that were actually important for the average American consumer. These statistics showed that, in fact, gas prices were the only thing that had gone down, and that by enough to shift the average to a good-looking spot. However, both food and shelter prices had gone up by 4.9 percent and 7.7 percent, respectively.
She even commented on how the prices of other things were going down as well, although not many of them as immediately relevant as food or shelter for most Americans:
So what we’re seeing in the report, again, shelter prices, still high, but we saw some declines in areas like airline fares, used cars and trucks, medical care. So still seeing some declines. It's a moderating inflation picture, despite what the headline looks like.
Solomon and Blackwell ended the segment with a tease for a possible rate pause by the Fed, should the inflation rate remain the same until they meet in September:
But I will say that a report like this, Citi Bank, for example, put out a report this morning saying that if, in fact, we saw core CPI, core inflation coming in at 0.2 percent, it would give the Fed some—some credibility, some—some evidence to, perhaps pause next month. So take that for what you will. I mean, we still have a few more weeks left, but, maybe a pause.
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Transcript of the segment below (click Expand):
CNN This Morning
8/10/23
8:43:49 AM ET
[ON-SCREEN HEADLINE: U.S. Inflation Rose in July for First Time in a Year]
VICTOR BLACKWELL: Alright, this just in, the July inflation report.
CNN business correspondent Rahel Solomon is here with the numbers. Alright, what did we learn?
RAHEL SOLOMON: Good morning. So this is a nuanced inflation report. So at face value it actually looks like an acceleration, but let me put this in context.
So, headline inflation came in at 3.2 percent on an annual basis, which appears to be an acceleration, but it is actually what economists call a—a base effect. Essentially, this has a lot to do with what inflation was doing a year ago, right?
So, I think the monthly picture actually gives us a better sense of what inflation is actually doing. So you can see inflation held steady at 0.2 percent on a monthly basis. 90 percent of that increase was shelter, 90 percent of that was shelter.
When you look at, sort of, core inflation, which strips away categories like energy, which can be volatile, or food, which can be really volatile, that also remained steady at 0.2 percent on a monthly basis. On an annual basis, that came in at 4.7 percent.
I wanna show you some of the categories that we as consumers deal with the most. You can see gasoline prices over the last year or so have fallen quite precipitously, about 20 percent. Food prices, 4.9 percent, and shelter still higher by 7.7 percent.
So what we’re seeing in the report, again, shelter prices, still high, but we saw some declines in areas like airline fares, used cars and trucks, medical care. So still seeing some declines. It's a moderating inflation picture, despite what the headline looks like.
What does this mean for the Fed? The Fed meets next month. They still have a lot more reports between now and then. They have another jobs report, they have more inflation reports.
But I will say that a report like this, Citi Bank, for example, put out a report this morning saying that if, in fact, we saw core CPI, core inflation coming in at 0.2 percent, it would give the Fed some—some credibility, some—some evidence to, perhaps pause next month. So take that for what you will. I mean, we still have a few more weeks left, but, maybe a pause.
BLACKWELL: Maybe.
SOLOMON: Maybe.
BLACKWELL: Alright.
SOLOMON: Saying there’s a chance.
BLACKWELL: So you're saying there’s a chance? Rahel Solomon, thanks so much.
SOLOMON: Good to be with you guys.
POPPY HARLOW: Thank you, Rahel.
