US inflation is slowing, revealing the most disappointing part

On August 14, the US Department of Labor released a report showing that consumer prices in the country increased again in July 2024, but still followed a trend of slowing inflation.

Another positive signal for the US's fight against inflation. (Source: AP)

Specifically, the US consumer price index (CPI) increased by 0.2% in July, after decreasing by 0.1% in June. Compared to the same period last year, as of July 2024, the CPI increased by 2.9%, after increasing by 3.0% in June.

Excluding the volatile food and energy components, the core CPI rose 0.2% in July, after rising 0.1% in June.

Compared to the same period last year, as of July, the core CPI increased by 3.2%, the lowest increase since April 2021, after the increase of 3.3% in June.

Investors and policymakers see the Labor Department report as a positive sign for markets and the economy, allowing the Federal Reserve to cut interest rates while maintaining a generally restrictive monetary policy, said Jeffrey Roach, chief economist at LPL Financial, a financial brokerage firm.

The most disappointing part of the Labor Department's report was housing prices, which economists and policymakers had expected to decline and help push inflation closer to the Fed's target.

Housing prices, the largest component of the services sector, rose 0.4% in July, after falling 0.2% in June.

Other categories, however, fared better for consumers. Clothing, new and used cars, and airfares all fell, while health care saw its biggest drop on record.

Consumer price inflation has eased significantly from its peak of 9.1% in June 2022 and is moving towards the US central bank's 2% target.

With inflation on the decline, combined with a weakening job market, the Fed is strongly expected to start cutting interest rates next month, while the extent of the cut will likely be determined by upcoming data.

Ahead of its September meeting, the Fed will receive more data on the personal consumption expenditures (PCE) price index and the jobs report, which will be closely scrutinized after disappointing July data contributed to a global market sell-off and fueled recession fears.

The Fed's interest rate cut rate at its September 17-18 policy meeting is forecast at 50 basis points or 25 basis points.

Source: https://baoquocte.vn/lam-phat-my-dang-dan-cham-lai-he-mo-phan-dang-that-vong-nhat-282619.html