Falling gasoline prices helped Americans recover slightly from the pain of high inflation last month, but overall price gains hit a 40-year high in June. After that, it slowed down slightly.
Consumer prices rose 8.5% year-on-year in July, the government said Wednesday, down from a 9.1% year-on-year rise in June. On a month-by-month basis, prices remained unchanged from June to July, the smallest increase in more than two years.
Still, prices for various goods and services are rising, making the situation worse for most Americans. Average wages are rising at their fastest pace in decades, but not fast enough to keep up with accelerating costs for things like food, rent, cars and health services.
Last month, Excluding the volatile food and energy categories, so-called core prices rose just 0.3% from June, the smallest monthly increase since April. Also, compared to a year ago, the core price in July rose 5.9%, the same year-on-year rise as in June.
President Joe Biden has blamed falling gas prices for the cost of his policies, including the massive release of oil from the nation's strategic reserves, which is straining U.S. finances, especially at low prices. He pointed out that it has shown that it is helping to alleviate highs. Income American and Black and Hispanic households.
However, Republicans have emphasized sustained high inflation as a top priority in the midterm congressional elections, and polls show rising prices are causing Biden's approval ratings to plummet.
On Friday, the House is poised to give Congress final approval for a tax and climate revival package pushed by Rep. Biden and Democrats. Economists say the measure, dubbed the Inflation Reduction Act by its proponents, will have minimal impact on inflation over the next few years.
Although there are signs that inflation will ease in the coming months, it could be well above the Federal Reserve's 2% annual target next year or into 2024. Chairman Jerome Powell confirms a series of monthly core inflation declines before the Fed considers a moratorium on rate hikes. The Fed has raised benchmark short-term interest rates at the last four rate-setting meetings. This includes his three-quarter point gains in both June and July. This is his first major raise since 1994.
Blockbuster Jobs He reports 528,000 jobs have been added, wages have risen, and the unemployment rate has reached a half-century low of 3.5%, prompting the Fed to Expectations to announce a 4-point rate hike have solidified. September. Solid employment tends to drive inflation because it gives Americans more collective purchasing power.
Declining expectations are one of the positive signs. This may reflect the drop in gasoline prices, which is very visible to most consumers.
Inflation expectations can be self-fulfilling: If people believe that inflation will remain high or worsen, they are more likely to take action, such as demanding higher wages, It could push prices up in a self-perpetuating cycle. Companies then often raise prices to offset rising labor costs. But Americans expect inflation to be lower one year, three years and five years from now than they did a month ago, according to a New York Fed survey.
Supply chains are also becoming less tangled, with fewer ships docking in Southern California ports and lower transportation costs. Commodity prices such as corn, wheat and copper plummeted.
However, in volatile categories such as rent, costs are still skyrocketing. A third of his Americans rent homes, and rents are so high that many spend less money on other items.
Rent hikes are hitting young Americans particularly hard, according to data from Bank of America customer accounts. Average rent payments for so-called Gen Z renters (those born after 1996) jumped 16% year-over-year in July, while baby boomers increased only 3%.
Stubborn inflation is not just a US phenomenon. Prices have skyrocketed in the UK, Europe, and developing countries such as Argentina.
In the UK, inflation rose 9.4% year-on-year in June to the highest level in 40 years. The 19 countries that use the euro currency hit 8.9% year-on-year in June, the highest since record-keeping for the euro began.
