USA: Inflation Continues Rapid Fall

In July, annual inflation in the USA reached its lowest level in more than three years. According to statistics released Wednesday, August 14, by the Labor Department, after a slight drop in June, “consumer prices rose just 0.2% from the previous month.” This downward trend was recorded for the first time in four years.

Compared to the situation in July 2023, in the same month of 2024, “prices rose by 2.9%, still down from 3% in June.” The administration of outgoing President Joe Biden announced in an official statement that “the rate of inflation recorded last month primarily reflects increases in rental prices and housing costs,” a trend that is “fading,” according to real-time data. In recent months, the continued slowdown in price increases has allowed US consumers to breathe a sigh of relief: they have not yet forgotten the price spike of three years ago, which primarily affected food, fuel, and rent prices. Inflation reached its highest point two years ago when it hit a record 9.1 percent, the highest level in more than 40 years.

After extrapolating very “volatile” categories such as food and fuel (gasoline and diesel), the US government reported that so-called “core” prices rose by 0.1% between May and June, and subsequently by another 0.2% from June to July. Compared to a year earlier, core inflation was 3.2% in July, down from 3.3% in June, the lowest level since April 2021.

According to the US media, “economists closely monitor core prices because they can provide a better understanding of inflation trends, especially for understanding the Federal Reserve’s future action on the benchmark rate.” And after the inflation data was released, Federal Reserve Chairman Jerome Powell said he “wanted to wait for further signs of slowing inflation before beginning to lower his key interest rate.” Wall Street’s expectations are that a decision on the first Fed rate cut could come in mid-September.