Inflation in the United States picked up slightly last month, the first rise after a year of continuous decline. The consumer price index rose to 3.2% in July in the annualized value, when in June it had fallen to 3%.
If this result proves anything, which the Federal Reserve (Fed) takes note of, it is that the fight against rising prices is still ongoing, that it is entrenched, although it has cooled down dramatically due to the aggressive containment policy imposed by the bank. american central.
Fed Chairman Jerome Powell has already warned that, despite the surprisingly good 3% data for June, the task was not yet over and pointed to the possibility of further rate hikes after their July meeting. On that occasion, the Reserve raised the price of money by a quarter of a point, after a pause that broke the dynamics of ten consecutive increases since March 2022.
Powell said that day that the 2% goal set as a goal was not yet in sight. His next meeting is scheduled for mid-September. “We will go day by day,” he said of whether there would be further rate hikes, which have been at their highest in 22 years to curb warming inflation.
Experts do not believe, however, that this price increase signifies a return to escalation and that long-term gains will erode. A year ago inflation was above 8%. This reflux is attributed to circumstantial factors such as the increase in the cost of plane tickets, hotels and the cost of energy. The stock market responded upwards after knowing this data.
Prices accelerated 0.2% from one month to the next, as forecast on Wall Street, although the omens pointed to an annualized rate that would go to 3.3%.
If the most volatile elements such as food and energy are excluded, the so-called core inflation, an index closely watched by the Fed, also grew by 0.2% in July. Its annualized value thus stands at 4.7%, also below the 4.8% expected by analysts. Experts stressed that steady monthly readings on core price pressures could discourage the Federal Reserve from raising rates again soon and agree to another temporary pause.
Much of the increase in prices was due to the cost of housing, with a rise of 0.4%, up to 7.7% annualized. Food became more expensive by 0.2% and energy by 0.1%. The taming of inflation made it easier for wages to rise by 0.3% month to month, and that this means 1.1% more compared to July 2022. But it's an improvement below inflation.
In the data set it is clear that inflation has fallen from that alarming 9.1% in June of last year, but the new data is far from the Fed's aforementioned 2% target. This seems to rule out any possibility of a forthcoming drop in rates as some progressive legislators are demanding. Experts had warned in advance not to speculate on the July rebound.
