Due to a sharp decline in the price of gasoline, consumer prices in the United States did not increase in July. This is the first significant sign of relief for Americans who have watched inflation soar over the past two years.
The Consumer Price Index (CPI) was unchanged in July after rising 1.3% in June, according to a closely watched report released by the Labor Department on Wednesday. Despite this, the report showed that underlying inflation pressures are still high as the Federal Reserve considers whether to adopt another significant interest rate hike in September.
Following a roughly 20% decrease in the price of gasoline, economists surveyed by Reuters predicted a 0.2% increase in the monthly CPI in July. According to motorist advocacy group AAA, prices at the pump increased in the first half of this year as a result of the conflict in Ukraine, reaching a record-high average of more than $5 per gallon in mid-June.
However, the Fed has stated that a number of consecutive months of CPI growth declines will be required before it will halt its increasingly aggressive tightening of monetary policy to combat inflation, which is currently running at four-decade highs.
Due to a number of factors, such as congested global supply chains, a significant government stimulus early in the COVID-19 pandemic, and Russia’s invasion of Ukraine, U.S. consumer prices have been rising.
One element of the CPI that continued to be high in July is food, which increased 1.1% after rising 1.0% in June.
After rising by 9.1% in June, the CPI increased by a less-than-expected 8.5% over the course of the year ending in July. Positive trends were also seen in the underlying inflation pressures, which do not include the volatile food and energy components.
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