Inflation report today: CPI data shows consumer prices jumped 8.5% in July, slipping from 40-year peak

WASHINGTON– Falling gas prices gave Americans a little respite from the pain of high inflation last month, although the rise in overall prices slowed only slightly from the four-decade high it hit in June.

Consumer prices rose 8.5% yoy in July, the government said on Wednesday, after rising 9.1% yoy in June. On a monthly basis, prices were flat from June to July, the smallest such increase in more than two years.

Still, the prices of a wide range of goods and services are rising, making most Americans worse off. Average paychecks are rising faster than they’ve been in decades — but not fast enough to keep up with rising costs for groceries, rent, cars and medical care.

President Joe Biden has pointed to falling gas prices as a sign his policies — including large oil spills from the country’s strategic reserve — are helping to ease higher costs that have been weighing on Americans’ finances, especially for lower-income Americans and Black and Hispanic households.

MORE: Senate Democrats pass inflation-cutting bill; House is to vote next

Still, Republicans are emphasizing persistently high inflation as the top issue in the midterm elections, with polls showing that high prices have driven Biden’s approval ratings sharply lower.

On Friday, the House of Representatives is poised to give Congressional final approval of a revived tax and climate package being pushed by Biden and Democratic lawmakers. Economists say the measure, dubbed the Inflation Reduction Act by its supporters, will have minimal impact on inflation over the next few years.

While there are signs that inflation may ease in the coming months, it is likely to remain well above the Federal Reserve’s annual target of 2% well into next year or even into 2024. Chairman Jerome Powell said the Fed would need to see a series of monthly declines in core inflation readings before it would consider pausing its rate hikes. The Fed has raised its short-term interest rate at its last four rate-setting meetings, including a three-quarter-point hike in June and July — the first such a large hike since 1994.

SEE ALSO: The Cost of Back to School is Soaring. Here’s how to lower the cost of inventory and beat inflation

A blockbuster July jobs report released by the government on Friday — with 528,000 new jobs, rising wages and an unemployment rate hitting a half-century low of 3.5% — bolstered expectations that the Fed will announce another three-quarter point hike , when they next meet in September. Robust attitudes tend to fuel inflation because they give Americans more collective purchasing power.

On a positive note, however, Americans’ expectations for future inflation have fallen, according to a survey by the Federal Reserve Bank of New York, likely reflecting the drop in gas prices, which is clearly visible to most consumers.

Inflation expectations can be self-fulfilling: If people think inflation will stay high or get worse, they are likely to take steps – like demanding higher wages – that can push prices up in a self-perpetuating cycle. Companies then often raise prices to offset their higher labor costs. But the New York Fed’s survey found that Americans expect inflation to be lower in a year, three and five years than they did a month ago.

Supply chain issues are also easing as fewer ships dock at Southern California ports and shipping costs drop. The prices for commodities such as corn, wheat and copper have fallen sharply.

However, in categories where price changes are more persistent, such as B. rents, the costs are still rising. A third of Americans rent their homes, and the higher cost of renting means many of them have less money to spend on other things.

Bank of America data, based on its customer accounts, shows that rent increases have hit younger Americans particularly hard. Average rent payments for tenants known as Generation Z (those born after 1996) rose 16% year over year in July, while the increase for baby boomers was just 3%.

Stubborn inflation is not just a US phenomenon. Prices have skyrocketed in the UK, Europe and less developed countries like Argentina.

In the UK, inflation rose 9.4% yoy in June, a four-decade high. In the 19 countries using the euro currency, it reached 8.9% year on year in June, the highest level on record for the euro.

Copyright © 2022 by The Associated Press. All rights reserved. Inflation report today: CPI data shows consumer prices jumped 8.5% in July, slipping from 40-year peak

Alley Einstein is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button