The inflation slowed more than expected in July in USAmainly 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) 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 spending by consumers from their savings in times of the COVID-19 pandemic, hurdles in the global supply chain, a shortage of domestic workers and Russia’s war against Ukraine, the CPI had soared 9.1%. in the year-on-year period in June, the highest record in 40 years.
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But July’s consumer price index was unchanged from the previous month, well below the expected rise, while the CPI excluding volatile food and energy prices rose just 0.3%, the lowest index 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 mitigate 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 most important problem is what happens with housing costs and rents”Diane Swonk, chief economist at KPMG, wrote on her Twitter account.
