Interannual inflation was reached in July its lowest level for more than three years, the latest sign that the worst price increase in four decades is easing and Federal Reserve prepares to cut interest rates in September.
The Labor Department's report this Wednesday showed that consumer prices have risen from June to July only 0.2% after falling slightly in the previous month for the first time in four years. Year-on-year, prices rose by 2.9%, compared to 3% in June. This is the year-on-year inflation figure mildest since March 2021.
The government said almost all of the increase last month was due to higher rents and housing costs, a trend that real-time data shows decreases.
For months, cooling inflation has been causing gradual relief for American consumersaffected by price increases that exploded three years ago, especially for food, fuel, rent and other essential goods. Inflation peaked two years ago at 9.1%, the highest level in four decades.
The cooling of inflation has gradually brought relief to American consumers. Photo: APInflation played a role a central role in the presidential electionsand former President Donald Trump blamed the Biden administration's energy policy for the price increases. Vice President Kamala Harris said on Saturday will soon present new proposals for “cost reduction” And also strengthen the economy as a whole.”
Excluding the volatile food and energy categories, so-called core prices rose 0.2% from June to July, after a 0.1% increase in the previous month. Year-on-year, core inflation rose 3.2%, compared with 3.3% in June, the lowest since April 2021. Economists watch core prices closely because they typically They provide a better overview of where inflation is heading.
What the Federal Reserve says
Federal Reserve Chairman Jerome Powell has stated that he aims to additional evidence a slowdown in inflation before the Fed begins to cut its key interest rate. Economists generally expect the first rate cut takes place in mid-September.
The rise in food, fuel and rent prices was a blow to consumers' pockets (Photo: Frederic J. Brown / AFP)If the central bank lowers its reference interest rate over time ttends to reduce credit costs for consumers and businesses. Mortgage rates have already fallen in anticipation of the Federal Reserve's first rate cut.
At a press conference last month, Powell said colder inflation data this spring had boosted the Federal Reserve's confidence Price increases are declining at an annual rate of 2%.
Another inflation report will be published next month before the Federal Reserve meeting on 17 and 18 Septemberand economists expect that this report will also show that price increases remained mostly moderate.
Inflation has slowed over the past two years as global supply chains have been repaired. Photo: Bloomberginflation has declined significantly in the last two years as you knowSupply chains have been repaired Around the world, rapid housing construction in many major cities has driven down rental costs and higher interest rates have slowed car sales, forcing dealers to offer better deals to potential car buyers.
A punch in the pocket
Consumers, especially those with low incomes They become more price sensitive, avoid high-priced items or switch to cheaper alternatives.
The prices In some services they continue to rise significantlyincluding auto insurance and health care. Auto insurance costs have skyrocketed as the value of new and used vehicles has soared compared to three years ago. But economists expect these costs to eventually grow more slowly.