Inflation in the United States continued to slow in July to 2.9% year-on-year, compared to 3% the previous month, its lowest level since March 2021 and slightly below expectations, according to the CPI index published on Wednesday.
• Also read: US Federal Reserve eyes September rate cut before unemployment spikes
According to data from the Labor Department, prices increased by 0.2% over the month, after a decrease of 0.1% in June, a trend however this time in line with analysts’ expectations, according to the consensus published by MarketWatch.
Excluding energy and food prices, which are more volatile by nature, so-called underlying inflation is 3.2% over one year, again in line with expectations and slightly down compared to the previous month (3.3%).
Goods prices are the main reason for the decline, with particular declines in the prices of new and used vehicles and, to a lesser extent, clothing and fuel.
Prices of non-energy services, which have been the main drivers of inflation for several months, have, however, started to rise again over one month, by 0.3%, compared to 0.1% in June, with in particular an upturn in housing and transport services.
Still, overall, the trend should confirm the data released so far and the feeling that inflation is well on its way to gradually returning to the Federal Reserve’s (Fed) long-term target of 2%.
The institution has so far refused to lower its interest rates, considering that it does not have the necessary data showing a sustainable return to the target.
Inflation in the United States had spiked in the wake of the reopening of the global economy after the COVID-19 pandemic, reaching up to 9.5% at an annual rate in June 2022.
The Fed had resolutely raised its rates, bringing them to a range of between 5.25% and 5.50%, their highest level since the beginning of the century.
Inflation has since slowed sharply, falling back to around 2.6% on average in recent months, according to the PCE index – favored by the Fed – but after a rapid decline in the second half of 2023, it has tended to stabilize between 2.5% and 3% since the start of this year.
The Fed’s next meeting is scheduled for mid-September, and the vast majority of analysts expect it to announce its first rate cut.
This will be the last meeting before the US presidential elections on November 5.
