Inflation rose in the US to 3.3% year-on-year in July, but data moderates expectations of rate increases

Inflation rose in the US to 3.3% year-on-year in July, but data moderates expectations of rate increases
August 31, 2023 – 13:46

The data reveals that the prices of goods fell 0.3% and those of services increased 0.4%. Personal consumption spending held steady at 0.2%.

During the month of July, inflation in the US it gained momentum again, reaching a 3.3% YoY compared to 3% recorded in Juneaccording to Consumer’s price index (IPC) used by the Federal Reserve (Fed) to monitor the economic situation. The Fed aims to keep inflation around 2%.

Detailed analysis of the data reveals that the prices of goods experienced a fall of 0.3%while the prices of services experienced an increase of 0.4%according to the report of the Department of Commerce.

The index of Personal Consumption Expenses (PCE), which follows a trend similar to the CPI and is considered by the fed as a key measure of inflation, also followed this trajectory. In the case of the PCE, year-on-year inflation stood at a 3.3% in July, compared to 3% in June. In monthly terms, PCE inflation held steady at a modest 0.2%, meeting analysts’ earlier expectations.

Core inflation: the data the Fed watches

Excluding the volatility of energy and food prices, also showed an increase. In July, this measure reached 4.2% year-on-year, in contrast to the 4.1% registered in June. In monthly terms, again stability was observedwith an increase of 0.2%.

In terms of the household economy, an increase in spending of 0.8% was recorded, surpassing the increase of 0.6% observed in June. However, household income grew less extent, with an increase of 0.2% compared to the 0.3% registered the previous month.

To address this inflationary situation, the Fed, which has the responsibility of maintaining economic stability, has made 11 increases in its key interest rates since March 2022. Currently, these rates stand at their highest level in more than two decades. , in a range between 5.25% and 5.50%.

The data maintains the pressure on Fed. Analysts and traders expect the US central keep your interest rate stable of reference in your next meeting of the days September 19 and 20. Fed officials are not ruling out raising rates again in the future, if necessary.

However, some analysts see a genuine slowdown in inflation rates based on breakdown data and they consider that it is highly possible that the Fed will choose not to make any moves in November. Operators’ expectations for the next central bank monetary policy meeting scheduled for September.

Source: Ambito

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