Inflation in the United States dropped to 2.9% year-over-year in July.
The United States experienced a peak inflation rate of 9.5% year-over-year in June 2022.
Inflation in the United States dropped to 2.9% in July, down from 3% the previous month, marking its lowest level since March 2021, according to data released this Wednesday by the Department of Labor.
This development provides a positive signal for the Federal Reserve to consider lowering interest rates.
However, prices rose 0.2% month-over-month in comparison to June, when the increase had been 0.1%. This trend aligns with analysts’ expectations, according to MarketWatch consensus.
Core inflation, which excludes volatile food and energy prices, was 3.2% year-over-year, also in line with market expectations and a slight decrease from the previous month’s 3.3%.
The decline in inflation is mainly attributed to falling prices of new and used vehicles, and to a lesser extent, clothing and fuels. On the other hand, services excluding energy, which have been key drivers of inflation, saw a monthly increase: 0.3% in July compared to 0.1% in June.
Overall, the trend in price increases suggests that the long-term goal of 2% year-over-year inflation set by the Fed might be within reach. So far, the institution has refrained from lowering interest rates, as it believes there is not yet sufficient data to show that this target is both attainable and sustainable over time.
The United States experienced a peak inflation rate of 9.5% year-over-year in June 2022, following the global economic reopening after the COVID-19 pandemic. In response, the Federal Reserve raised interest rates, bringing them to a range of 5.25% to 5.50%, the highest level since the early 2000s.
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