There’s good news on the US inflation front. Year-on-year inflation in July fell to its lowest level in more than three years. It’s the latest sign that the worst price hike in four decades is easing and may raise the prospect of a Federal Reserve interest rate cut in September. According to Fortune news, the department’s report released on Wednesday showed that consumer prices rose just 0.2% from June to July, after falling slightly last month for the first time in four years.
The mildest inflation figure
According to the news, consumer prices rose 2.9% compared to a year earlier, down from 3% in June. This was the mildest year-on-year inflation figure since March 2021. The increase in homes and other housing costs is slowing down. Inflation has played a central role in the US presidential election, with former President Donald Trump blaming the Biden administration’s energy policies for price hikes. US Vice President Kamala Harris said on Saturday that she would soon unveil new proposals to reduce costs and strengthen the economy overall.
Slight hike in grocery prices
In the U.S., grocery prices rose just 0.1% in July and were just 1.1% higher than a year earlier, a much slower pace of increase than in previous years. Yet many Americans still struggle with food prices that are 21% higher than they were three years ago, even though average wages have risen faster since then. Gas prices were unchanged from June to July and have actually fallen 2.2% over the past year.
Decrease in the prices of clothes, cars etc.
Clothing prices also fell last month. They are almost unchanged from 12 months ago. Prices of new and used cars also fell in July. Used car prices, which skyrocketed during the pandemic, have fallen by about 11% in the past year. Some food prices, including meat, fish and eggs, are rising faster than before the pandemic. However, dairy and fruit and vegetable prices fell in July. The surge in prices caused by the pandemic has eased. The decline in inflation for about a year has gradually provided relief to US consumers, who were particularly troubled by the surge in prices for food, gas, rent and other necessities three years ago.
Fed is looking for evidence of interest rate cut
Inflation peaked at 9.1% two years ago, the highest level in four decades. Excluding volatile food and energy costs, so-called core prices climbed a modest 0.2% from June to July, compared with a 0.1% increase the previous month. And compared with a year earlier, core inflation slowed to 3.2% from 3.3% — the lowest level since April 2021. Fed Chairman Jerome Powell has said he is looking for additional evidence of easing inflation before the Fed begins cutting its key interest rate. Economists widely expect the Fed’s first rate cut to come in mid-September.
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