US Inflation Cools: CPI Rises 2.9% Annually, Below Expectations
In July, annualized U.S. consumer prices climbed less than anticipated, raising the possibility that the Federal Reserve would begin reducing interest rates at its September meeting.
The consumer price index (CPI) released by the Labor Department increased by 2.9% in June, a modest slowdown from 3.0% in June. The amount was expected by economists to be equivalent to June’s rate.
The reading increased to 0.2% month over month after actually declining by 0.1% the previous month, in line with forecasts.
When more erratic categories like food and gasoline are excluded, the “core” number increased by 3.2% in the year ending in July, less than the 3.3% forecast. Underlying price rise increased to 0.2% on a monthly basis, following a 0.1% increase in June.
The U.S. central bank may be able to lower its policy rate from the band of 5.25% to 5.50% it has been in for more than a year if this publication, which came after Tuesday’s lower-than-expected July producer price index, is indicative of generally benign inflationary pressures.
Jerome Powell, the chair of the Federal Reserve, has underlined the importance of positive inflation statistics for a September rate reduction.
Furthermore, the payrolls data released at the beginning of the month revealed that the growth in U.S. jobs slowed down more than anticipated in July, and the unemployment rate rose to 4.3%. These developments may intensify concerns that the labor market is failing and could expose the economy to a recession.
