Inflation in the United States has reached its lowest level in over three years in July, raising the possibility of an interest rate cut by the Federal Reserve in September. Consumer prices rose just 0.2 percent from June to July, decreasing from previous months. Year-over-year inflation stood at 2.9 percent, down from 3 percent in June, the mildest rate since March 2021.
Despite President Trump’s criticism of inflation during the Biden administration, consumers are more focused on everyday prices and the stock market. Housing costs, a key driver of inflation in July, are expected to rise more slowly in the coming months. Grocery prices have increased modestly, while petrol prices have fallen in the last year. Used car prices, which had surged during the pandemic, dropped nearly 11 percent.
Economists suggest that the Fed is on track for a rate cut in September, although a significant cut is not expected. With the unemployment rate rising, there are concerns about a possible recession, but data shows that inflation is moving towards the Fed’s target of 2 percent. The slowing inflation is attributed to repaired global supply chains and a cooling rental market.
Despite some services seeing sharp price increases, consumers are becoming more price-sensitive, leading companies to restrain price hikes. The Fed is keeping a close eye on inflation data and is expected to make a decision on interest rates at its upcoming meeting. Overall, the gradual cooling of inflation is providing relief to consumers who have been grappling with high prices for several years.
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