The New Inflation Numbers Are Out. Your Grocery Receipt Says Otherwise. What the Hell Is Actually Getting More Expensive?
- Bruce Coffman
- Aug 12
- 4 min read
“Inflation is slowing” does NOT mean “things are getting cheaper.”
Prices don't have to keep exploding for people to continue feeling squeezed. Once prices go up, “slower inflation” mostly means they're going up more slowly—not that they went back down. The Trump administration is using the cooling inflation rate as a reason to celebrate. But there's a pretty important distinction here: slower inflation does not mean lower prices. You need to understand why your wallet is feeling more squeezed instead of relieved.
First: What the hell is CPI?
CPI = Consumer Price Index.
Think of it as the government's giant “How much more or less does the stuff people buy cost now?” thermometer.
The Bureau of Labor Statistics (BLS) tracks prices for a huge basket of goods and services that consumers spend money on: food, housing, gasoline, electricity, medical care, clothes, transportation, recreation, and so on. It uses spending patterns to give different things different weights because Americans obviously don't spend the same amount on lettuce as they do on housing. The main CPI-U covers more than 90% of the U.S. population.
So when somebody says:
“Inflation was 3.4%.”
they're basically saying:
The overall price level represented by this basket was 3.4% higher in July 2026 than it was in July 2025.
And this distinction is really important:
CPI is measuring the rate at which prices are changing, not whether prices are high.
That's the piece that trips everybody up.
Imagine a gallon of milk goes:
$3 → $4
That's a big price increase.
Then the next year:
$4 → $4.08
Inflation has slowed dramatically.
But milk is still $4.08.
The fact that inflation slowed does not mean milk went back to $3.
That's why someone can hear:
“Inflation is cooling!”
while standing at the grocery checkout thinking:
“THE FUCK IT IS.”
Both things can be true.
So what is this July report actually saying?
The big headline number is:
Prices were 3.4% higher in July 2026 than in July 2025.
That's actually slightly better than June, when the 12-month increase was 3.5%. So inflation, as measured by the overall CPI, cooled a little.
And in July alone, prices rose 0.1%, after actually falling 0.4% in June.
So the broad picture is:
Prices are still rising, but the overall pace of increase slowed slightly compared with a year earlier.
That's the boring economist translation.
Now let's get to the stuff that actually matters.
You can try to make sense of the full report here: CPI News Release
Here's where it gets interesting.
FOOD
Overall food prices rose 3.0% over the previous year.
But look at the split:
Food you buy at the grocery store: +2.7%
Food you buy away from home: +3.4%
And some grocery categories are behaving VERY differently from others.
For example:
Fruits & vegetables: +5.1%Nonalcoholic beverages: +4.1%Cereals & bakery products: +2.7%Meat/poultry/fish/eggs: +1.9%Dairy: -0.5%
That is much more interesting than “food inflation is 3%.”
Because you can see why your grocery experience might feel wildly different from the headline.
Someone buying a lot of produce and beverages may be getting absolutely hammered compared with someone whose grocery basket happens to lean toward categories that are flat or falling.
And restaurant food was up 3.4% over the year.
ENERGY is the fucking plot twist.
The overall energy index was up 14.7% over the past year.
Gasoline alone was up 24.6% year over year.
But—and this is the weird part—energy prices actually fell 1.5% in July and gasoline fell 2.9% in July.
So again:
“Gas prices fell this month.”
can be true at the same time as:
“Gas is dramatically more expensive than it was this time last year.”
HOUSING is another big one.
Shelter increased 3.2% over the last year, and in July it increased 0.1%. BLS says shelter accounted for roughly two-thirds of the entire monthly increase in CPI.
So when people say:
“Why the hell does everything still feel expensive?”
part of the answer is:
Because some of the biggest expenses in people's lives are still going up.
Housing doesn't have to explode by 20% in a month to remain a huge problem. It's a major component of household spending, so a persistent increase there matters enormously.
You may also hear about “core CPI,” which leaves food and energy out of the calculation because those prices can bounce around a lot. That's useful for looking at underlying inflation trends—but yes, you and I still have to buy food and pay for energy.
The BLS reports the “all items less food and energy” measure separately; in the July release it was up 2.5% over the year.
This article and its artwork were created with generative AI assistance and reviewed for factual accuracy and edited by Bruce Coffman.
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