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In the U.S., the pace of price increases slowed in July to 8.5 percent, year on year, compared to 9.1 percent in June, which was a 41-year peak, the labor department reported.
Energy prices downshifted last month, with gasoline prices falling 7.7 percent. The U.S. average price for a gallon of regular gas was down to $4 on 10 August, data service OPIS said, and fell further to $3.956 on 15 August, according to the American Automobile Association.
The cost of airline fares, clothing, and used cars also dipped in July.
Grocery prices ticked up 1.3 percent for the month, rocketing up 13.1 percent over the preceding year, their fastest rise since 1979, The Wall Street Journal noted.
Core prices, which ignore food and energy costs, were up 5.9 percent year on year.
Rising prices are the result of the country’s swift rebound from the COVID War and government lockdowns, fueled in part by a series of government stimulus payments and artificially low interest rates.
The stimulus spree is over and the U.S. Federal Reserve has begun jacking up rates in an attempt to slow, and eventually reverse, inflation while not tipping the economy into a recession.
The economy contracted in the last quarter for the second time in a row. Two consecutive quarters of economic shrinkage is the definition of a technical recession.
Housing costs, which take up about a third of the consumer price index, contributed 1.9 percentage points to inflation in July, compared to 1.7 in June, the WSJ said.
The price of housing is expected to remain more elevated than the majority of prices that make up the index, some economists have predicted, which could make inflation seem more broadly worse than it is.
That could lead the Fed to continue to raise interest rates more aggressively than is actually needed, raising the risk of recession, the WSJ said.
TRENDPOST: Several Fed officials have said that it will take more than one month’s data to convince them that inflation has made a lasting or meaningful correction.
As a result, despite it being a pure guess, as the equity market data proves, the gamblers are betting on only a half-point next month.