Inflation slowed more than expected in July in the United Statesmainly due to the fall in the price of gasoline at the stations, although it still remains at a very high level and this could prompt the Federal Reserve (Fed, central bank) to sharply raise interest rates again.
Consumer prices rose 8.5% in July on a year-over-year basis, according to the Consumer Price Index (CPI) released Wednesday by the Labor Department. And in the month, inflation is zero, which means that prices, against all expectations, have not increased compared to June.
Driven by aggressive consumer spending of their savings in times of the covid-19 pandemic, snags in the global supply chain, a shortage of domestic workers, and Russia’s war on Ukraine, the CPI had soared 9.1% year-on-year in June, the highest in 40 years.
But the consumer price index for July was unchanged from the previous month, well below the expected rise, while the CPI excluding food and energy products with volatile prices rose just 0.3%, the index lowest in four months, according to the figures.
Consumer prices have maintained their upward trend in the United States and this has worn down family budgets and, by extension, the popularity of the country’s president, Democrat Joe Biden, who took office in January 2021.
Opponents accuse the president of fueling rising inflation with his massive $1.9 billion state aid package to alleviate the effects of the pandemic, enacted in March last year shortly after taking office.
Republicans have renewed criticism of Biden’s economic policy, warning that Sunday’s Senate passage of his massive health care and climate bill dubbed the “Reducing Inflation Act” would do the opposite of its stated purpose. .
But experts worry that the slowdown in inflation linked to falling gasoline prices could be offset by rising house prices.
“The biggest issue is what happens to housing costs and rents,” wrote Diane Swonk, chief economist at KPMG, on her Twitter account.
Wall Street opens sharply higher
The New York Stock Exchange opened sharply higher on Wednesday, celebrating a slowdown in US inflation in July that could prompt the Federal Reserve (Fed) to be less severe in raising interest rates.
The Dow Jones index climbed 1.45%; the Nasdaq, 1.94%; and the S&P 500, 1.55%, after the publication of the IPC index for July.
Source: AFP
