Two major indicators of inflation rose last month, but most economists say they aren't worried. Some even say it's a good thing.
The Consumer Price Index, an indicator of gas, food and clothes prices, rose 0.5 percent in July. That's its largest increase since March, according to the Labor Department.
A rise in gas prices, which climbed 4.7 percent last month, may account for the index's jump. High rents also contributed to the highest increase in housing costs in three years.
The core index, which excludes volatile food and energy prices, and which economists tend to follow more closely than the overall measure, rose at a less dramatic rate of 0.2 percent, a slight fall-off from the 0.3 percent rise in May and June. Over the past 12 months, the core index has risen 1.8 percent, the largest year-over-year increase since December 2009.
Similarly, the core index of the Producer Price Index, a measure of how much goods cost before retail prices are set, rose by 0.4 percent -- its highest increase in six months,according to the Labor Department. Tobacco prices rose especially, jumping 2.8 percent, their greatest increase in more than two years.
Taken together, the uptick in prices might stoke fears of coming inflation, but economists say the increases will be short-lived. The fact that core PPI rose twice as much as core CPI suggests that retailers are attempting to shield consumers from rising costs, so shoppers aren't likely to feel the full pain of inflation. Prices for raw materials are rising at a slower pace than prices for finished goods, which economists say is also a good sign that the inflation is short-lived.
"Overall, these data do little to alter our belief that most of the recent surge in core consumer price inflation is temporary and that it will fall back next year," Paul Dales, senior U.S. economist with Capital Economics, said.
Meanwhile, some experts claim that a modest amount of inflation is just what the economy needs, since in theory it will stimulate growth by encouraging people to spend.
Floyd Norris, chief financial correspondent for the New York Times, seems to largely support the measure, arguing in an op-ed this week that a limited amount of inflation may aid the country's struggling economy.
"It is time for a new lesson to be learned. Sometimes we need inflation, and now is such a time," Norris wrote.
When the Federal Reserve recently announced its intentions to keep interest rates near zero through 2013, it met with some opposition from inflation hawks who feared the low rates would contribute to higher prices. Defenders of the Fed argued that inflation rates are too weak to worry about at the moment.
But the fact that three Federal Reserve committee members voted against the policy -- the first time so many have dissented to a Fed policy since 1992 -- indicates that this is a divisive way of thinking.
One of those dissenters, Dallas Federal Reserve Bank President Richard Fisher, admitted that his "concern is not with immediate inflationary pressures," according to Fox Business. But he has still criticized the Fed's decision, saying that some business owners could be unnerved by what they interpret as "laying the groundwork" for inflation in the future.