The inflation rate in the US also has an impact on the Federal Reserve’s interest rate decisions and on the stock markets. That’s why many are eagerly awaiting the latest monthly data.
In the US, price inflation unexpectedly slowed in July. Consumer prices rose by 2.9 percent compared to the same month last year, the US Department of Labor announced in Washington on Wednesday. The inflation rate is the lowest since March 2021. In the previous month, the rate was 3.0 percent. Economists had on average expected the rate to remain unchanged.
Compared to the previous month, prices rose by 0.2 percent. This was forecast by economists.
The core inflation rate excluding energy and food fell from 3.3 percent in the previous month to 3.2 percent in July. This was also what economists had expected. Compared to the previous month, core consumer prices rose by 0.2 percent, as expected. The core rate is the subject of particular attention from the US Federal Reserve (Fed). Experts believe that it reflects the general price trend better than the overall rate.
US President Joe Biden spoke of important progress. “Inflation has fallen below three percent and core inflation has fallen to its lowest level since April 2021,” Biden said in a written statement. He stressed: “We still have more to do to reduce costs for hard-working Americans, but we are making real progress.”
The Fed is moving toward easing its monetary policy. The financial markets consider an interest rate cut in September to be a given. A larger interest rate hike of 0.50 percentage points is no longer ruled out.
The Fed is aiming for inflation of two percent. In addition to falling inflation, weaker labor market and economic data also speak in favor of a reduction. The US Federal Reserve has signaled a rate cut, but has made this dependent on data developments. Concerns about the US economy have temporarily led to turbulence in the financial markets.
Source: Stern
