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inflation It has dropped below 3%. For the first time in more than three years, theAccording to the Bureau of Labor Statistics.
Inflation was 2.9% in July. It fell below 3% for the first time since March 2021. When the price Coronavirus-19 pandemic.
This could prompt the Fed to cut interest rates to ease economic pressures. A measure that excludes more volatile categories such as food and energy has risen the least in the past 12 months since April 2021 – “core” prices rose 0.2% month-on-month and 3.2% year-on-year.
The Labor Department’s Bureau of Labor Statistics said Wednesday that its consumer price index rose 0.2% last month after falling 0.1% in June.
The new data were mostly in line with analysts’ expectations and could lead central bank officials to agree to a rate cut at their policy meeting next month.
Officials, who for months have said they would not cut borrowing costs until they were sure inflation was falling to normal levels, are increasingly recognizing the risks of keeping interest rates high for too long.
Hiring has slowed and global markets are concerned that the Federal Reserve may be putting too much pressure on the economy. The Washington Post Famous.
Housing remained the main driver of inflation, accounting for nearly 90% of the monthly increase. On a monthly basis, rents rose 0.5%, compared with a 0.3% increase in June. A measure of homeownership costs also rose.
Meanwhile, energy costs are stagnating after falling for several months.
Auto insurance and furniture prices rose in July, while used cars, health care, flights and clothing prices fell compared with the previous month. Gasoline prices are also lower compared with last year, and the possibility of a rate cut in September offers some hope for those trying to get a mortgage, auto loan or expand a business.
Inflation remains above its pre-pandemic normal of 2%, but has slowed significantly since peaking at 9.1% in 2022.
The Fed kept interest rates at 5.3% last year, which is still relatively high.
The main question facing investors now is whether the Fed will cut interest rates by a quarter percentage point or half a percentage point, which would be a larger-than-normal cut. The New York Times Famous.
Federal Reserve Chairman Jerome Powell said late last month that recent reports show better inflation data than at the end of last year. Much of the decline in inflation in 2023 will come from commodity prices as people stop buying home office and fitness equipment purchased during the pandemic as stay-at-home policies are implemented.
Powell said at the time that the most recent report was “a little bit better than what we saw last year” and noted that “broader deflation” was taking shape. The Washington Post.
“That’s much better than it was a year ago,” he added. “Much better. I want to emphasize that the work is not done, and we are committed to achieving inflation sustainedly below 2%. But we need to be mindful of this progress.”
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