Annual US inflation falls to 3-year low; Fed cut next?
Wednesday's report from the
The ongoing inflation slowdown could affect the presidential campaign, given that former President
The government said nearly all of July's inflation reflected higher rental prices and other housing costs, a trend that, according to real-time data, is easing. As a result, housing costs should rise more slowly in the coming months, contributing to lower inflation.
The report showed that inflation is steadily falling closer to the Fed's 2% target -- though not too quickly, which might suggest that the economy is weakening, said
"It's a comforting report, both because it is going in the right direction and because it is not doing anything too dramatic," Sinclair said. "It is exactly what we wanted to see."
In July, grocery prices rose just 0.1% and are a scant 1.1% higher than they were a year earlier, a much slower pace of growth than in previous years.
Yet many Americans are still struggling with food prices, which remain 21% above where they were three years ago.
Gas prices were unchanged from June to July and have actually fallen 2.2% in the past year.
Clothing prices also dropped last month; they're nearly unchanged from 12 months earlier.
New and used car prices fell in July, too. Used car prices, which had skyrocketed during the pandemic, have tumbled nearly 11% in the past year.
Some food prices, including for meat, fish and eggs, are still increasing faster than before the pandemic. Dairy and fruit and vegetable prices, though, fell in July.
Even as inflation -- the rate of price increases -- keeps slowing, many people are still struggling with daily costs that, on average, are still about 20% higher than they were three years ago. That's true even though average
"Everything," he said, "is expensive. What more do you need to know?"
Borchuk, 48, who works in the catering business, had just grabbed a hot fried chicken sandwich for
Borchuk said he's been cooking more at home and eating out less and buying more of his groceries at
Goolsbee's remarks suggested that he would support a series of rate cuts in the coming months.
At a
"Yes, yes, yes," he said. "I've told you we're going to have a soft landing," he added, referring to an economy in which inflation is tamed without a steep recession.
For nearly a year, cooling inflation has provided gradual relief to America's consumers, who were stung by the price surges that erupted three years ago. Inflation peaked two years ago at 9.1%, the highest level in four decades.
In July, excluding volatile food and energy costs, so-called core prices climbed a mild 0.2% from June, after a 0.1% increase the previous month. And compared with a year earlier, core inflation slowedfrom3.3%to3.2%-- the lowest level since
Fed Chair
When the central bank lowers its benchmark rate, over time it tends to reduce the cost of borrowing for consumers and businesses. Mortgage rates have already declined in anticipation of the Fed's first rate reduction.
Many companies have slowed their price increases as consumers have become more resistant to paying more.
Inflation has eased substantially in the past two years as global supply chains have been repaired, a spate of apartment construction in many large cities has cooled rental costs and higher interest rates have slowed auto sales, forcing dealers to offer better deals to potential car buyers.
Consumers, particularly lower-income ones, are also becoming more price-sensitive, forgoing high-priced items or shifting to cheaper alternatives. This has forced many companies to rein in price hikes or even offer lower prices.
AP Writers Anne D'Innocenzio in
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