Consumer prices in United States must have risen at a much slower pace in July due to a sharp drop in the cost of Gasolinegiving the first notable sign of relief to the pockets of Americans, who saw the inflation skyrocket in the last two years.
The U.S. consumer price index may have climbed 0.2% last month after rising 1.3% in June, according to economists polled by Reuters ahead of the release of the Labor Department report on Wednesday.
That would be the biggest monthly slowdown in price increases since 2005, and would come on the heels of a roughly 20% drop in the cost of gasoline.
Pump prices soared in the first half of the year due to the war in Ukrainehitting record highs of $5 per gallon in mid-June, according to data from the American Automobile Association (AAA).
The report, however, should still show that core inflation pressures remain high, as Federal Reserve ponders whether another oversized interest rate hike will be necessary in September.
The US central bank has indicated it needs to see several months of cooling off in price growth before it stops its battle with inflation – currently the highest in 40 years.
Consumer prices have been rising due to a number of factors, including bottlenecks in global supply chains, massive fiscal stimulus from governments at the start of the coronavirus pandemic. Covid-19 and the war of Russia in Ukraine.
The inflation of foods is one of the components of the price index that must have remained high in July.
“Overall changes in consumer prices on an annual basis are well above target and are likely to remain high enough in the coming months to keep rates firmly on an upward trajectory,” said Rubeela Farooqi, chief US economist at High Frequency Economics.
In the 12 months through July, the consumer price index may have slowed its rise to 8.7% from 9.1% in June, according to the Reuters poll, but core inflationary pressures, which exclude volatile components , such as food and energy, likely continued at a high level.
Although core inflation should have slowed to 0.5% in July, against 0.7% in June, it should show an increase of 6.1% in the 12 months through July, against 5.9% in June.
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I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.