July saw the lowest year-over-year inflation in over three years, with consumer prices rising just 0.2 percent from June to July and 2.9 percent from a year earlier. The slowdown in inflation is likely to lead to an interest rate cut by the US Federal Reserve in September. However, despite the positive economic indicators, former President Donald Trump has criticized President Joe Biden’s handling of inflation.
The drop in inflation is attributed to lower housing costs and stable prices for groceries, petrol, and clothing. Grocery prices rose just 0.1 percent in July, while petrol prices remained unchanged and used car prices fell. Although some food prices are still rising, overall consumer prices are stabilizing, providing relief to American consumers.
Economists are optimistic about the inflation trend, with expectations that the Fed will gradually lower interest rates to support economic growth. The cooling inflation has also led to lower mortgage rates, providing further relief to consumers and businesses. The Fed is continuously monitoring inflation data and is expected to make a decision on interest rates in the upcoming months.
Despite concerns of a looming recession due to the increase in the unemployment rate, economists are confident that inflation is under control and the economy is on a positive trajectory. The easing of inflation, coupled with consumer price sensitivity and market adjustments, indicate a more stable economic outlook for the United States.
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