(DailyEmailNews.com) – Although inflation went up as expected in July due to rising housing costs pushing the numbers higher, Americans received rare good news as current inflation rates are the lowest since March 2021.
According to the Bureau of Labor Statistics, the core rate has also not been this low since April 2021, while headline inflation stood at 3% this June.
A recent Labor Department report detailed this trend, which might encourage the Federal Reserve (Fed) to cut interest rates at its planned meeting in September.
The consumer price index (CPI), which tracks the cost of various goods and services, rose by 0.2% in July, leading to a year-over-year increase of 2.9%.
This was in line with what economists predicted from Dow Jones, who anticipated a monthly rise of 0.2% and an annual rate of 3%.
When volatile items like food and energy are set aside, the core CPI also rose by 0.2% over the month, reaching an annual gain of 3.2%, which met the forecasted figures.
Nearly 90% of the inflation bump was due to a 0.4% rise in shelter costs. Meanwhile, food prices went up by 0.2%, but energy costs did not change.
The stock market futures fell slightly following this report, while Treasury yields mostly climbed.
Despite the mild overall increase in food prices, certain items like eggs saw a notable 5.5% jump.
Conversely, the costs for cereals and bakery goods dropped by 0.5%, and dairy products decreased by 0.2%.
Recent trends suggest inflation is slowly aligning back towards the Federal Reserve’s 2% target.
Another report from the Labor Department indicated that producer prices, which reflect wholesale inflation, only increased by 0.1% in July, with a yearly rise of 2.2%.
Federal Reserve officials seem open to reducing rates, though they have not committed about when and by how much.
Market predictions hint at a possible reduction of a quarter to half a point in the upcoming September 17-18 meeting, with further cuts likely by the end of 2024.
As inflation cools, concerns about a weakening job market could prompt the Fed to lower rates for the first time since the early stages of the COVID crisis.
The report also highlighted persistent inflation in certain sectors, suggesting some ongoing challenges.
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