Inflation in the United States increased in July following 12 consecutive months of decline. However, when excluding volatile food and energy costs, core inflation remained stable, indicating that the Federal Reserve’s interest rate hikes continue to curb price increases. The latest government data shows that consumer prices rose by 3.2% compared to the previous year, up from a 3% increase in June, which was the lowest rate in over two years. Despite this, inflation remains below its peak of 9.1% last year but still above the Fed’s 2% target.
Core inflation, which is closely observed by the Fed, economists, and investors, remained at a moderate 0.2% from June to July, thanks to easing prices of groceries, used vehicles, and electronics. Economist Rubeela Farooqi comments that this is a positive development for policymakers. The Fed will use these price data to determine whether to continue raising interest rates. They have already increased their benchmark rate 11 times but will consider factors like inflation trends and economic indicators before making further decisions.
July’s price report indicates that housing costs accounted for around 90% of the overall increase of 0.2%. Excluding shelter costs, core prices actually declined by 0.1%. Food prices rose mildly at 0.2%, but prices of eggs, meat, beer, and dairy products decreased. Energy costs increased minimally by 0.1%, as higher gasoline prices were offset by lower electricity prices. Additionally, used-vehicle prices fell for the second consecutive month due to improved production of new vehicles. On a three-month basis, annualized consumer inflation was at 1.9%, the slowest pace in three years.
Economists acknowledge that the Fed has made progress in managing inflation, but the easy gains have likely already been achieved. Supply chain disruptions caused a surge in prices last year but have since resolved, reducing upward pressure on goods prices. However, service businesses, particularly those reliant on labor costs, continue to experience inflationary pressures. Worker shortages have led to wage increases, which companies offset by raising prices. Despite concerns, economists predict that inflation will continue to trend lower in the coming months.
Many Americans still feel the effects of higher prices, particularly for food. While there are expectations of a “soft landing” for the economy – raising rates to control inflation without causing a recession – economists and market analysts anticipate that the July rate hike will be the last for now. The Fed’s favored inflation gauge and the August employment report will be crucial factors in their decision-making process at the upcoming meeting in September.
Denial of responsibility! SamacharCentrl is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
