US consumer inflation annually rises 2.9% in July, slowest increase since March 2021
Consumer price index monthly rises 0.2%; annually, core CPI gains 3.2% to mark smallest annual increase since April 2021
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ISTANBUL
Consumer inflation in the US annually rose 2.9% in July, the slowest annual increase since March 2021, according to data released Wednesday.
The Consumer Price Index (CPI), which measures changes in the prices of goods and services from a consumer's perspective, came in lower than market estimates of a 3% gain and slowed down from a year-on-year increase of 3% recorded in June.
The figure is also a sharp decline from the 9.1% annual gain recorded in July 2022, which was the highest since November 1981.
On a monthly basis, CPI showed an increase of 0.2% in July and came in line with market expectations.
That figure, however, showed an acceleration from June, which had a monthly decline of 0.1%.
"The index for shelter rose 0.4 percent in July, accounting for nearly 90 percent of the monthly increase in the all items index," the Bureau of Labor Statistics said in a statement.
"The energy index was unchanged over the month after declining in the two preceding months," it added. "The index for food increased 0.2 percent in July, as it did in June."
Core CPI, which excludes volatile food and energy prices, gained just 0.2% in July from the previous month, also coming in line with market estimates, but slightly gaining pace from the 0.1% increase in June.
Annually, core CPI climbed 3.2% in July, marking the smallest annual increase since April 2021, also coming in line with expectations and decelerating from a 3.3% year-on-year gain recorded in June.
Housing, gas, electricity
The shelter index annually showed a gain of 5.1% in July compared to the same month last year, according to the figures.
"The index for rent rose 0.5 percent over the month and the index for owners' equivalent rent increased 0.4 percent," said the bureau.
While the gasoline index remained unchanged in July compared to the previous month, the fuel oil index climbed 0.9%.
On an annual basis, the gasoline index plummeted 2.2% in July from the same month in 2023.
The electricity index, meanwhile, rose 0.1% last month, and the index for natural gas fell 0.7%, the figures showed.
The medical care index fell 0.2% in July, while the index for hospital services dove 1.1% last month.
Wages rising faster than prices for 17 straight months, says Biden
President Joe Biden said the latest figures show that his administration continues to make progress fighting inflation and lowering costs for American households.
"Inflation has fallen below 3% and core inflation has fallen to the lowest level since April 2021," he said in a statement released by the White House.
"We have more work to do to lower costs for hardworking Americans, but we are making real progress, with wages rising faster than prices for 17 months in a row."
Biden, however, noted that prices remain "too high" in the world's biggest economy.
"Large corporations are sitting on record profits and not doing enough to lower prices. That’s why we are taking on Big Pharma to lower prescription drug prices. We’re cutting red tape to build more homes while taking on corporate landlords that unfairly increase rent. And we’re taking on price gouging and junk fees to lower everyday costs from groceries to air travel," he said.
The president argued that Congressional Republicans would raise prices for middle class families while cutting taxes for billionaires and big corporations.
Fed expected to cut rates by 75 basis points by end of 2024, says economist
Dana Peterson, chief economist at research group organization The Conference Board, said total and core CPI inflation continued to cool in July, supporting the narrative of a first interest rate cut by the Federal Reserve in September.
"While the Fed focuses on the Personal Consumption Expenditure (PCE) deflator, the CPI often portends the direction of the PCE inflation gauges, which will be released later this month," she said in a statement.
Peterson said the latest inflation data continue to slow consistent with the Fed's desire to stabilize inflation at its 2% target.
She added that retail sales data, which will be released Thursday, will provide early insights into how real GDP faired at the start of the third quarter of this year and noted that second quarter growth was "robust."
"Again, we believe that the labor market is healthy and is engaging in a natural slowdown from the breakneck pace of additions in the wake of the (coronavirus) pandemic," she said.
The Conference Board expects the American economy to slow notably in the second half of this year but avoid a recession, said Peterson.
"Given this anticipation, we believe the Fed will cut by 75 basis points by end-2024, likely 25 basis points at each of the September, November and December meetings," she added.