US consumer inflation records smallest annual rise since 2021

WASHINGTON: United States consumer inflation eased slightly in July, according to government data published on Wednesday (Aug 14), its smallest 12-month increase since March 2021 and a positive sign for the Federal Reserve (Fed) as it weighs cutting interest rates.
The consumer price index (CPI) rose 2.9 per cent last month from a year ago, the Labor Department said in a statement, while a measure that strips out volatile food and energy costs cooled to an annual rate of 3.2 per cent.
This was slightly lower than the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal.
The monthly inflation rate picked up by 0.2 per cent after declining in June, in line with expectations.
Almost 90 per cent of the monthly increase was down to a 0.4 per cent increase in shelter costs, the Labor Department said. Energy prices remained unchanged, while the index for food rose 0.2 per cent.
So-called “core” inflation, excluding volatile food and energy prices also eased last month to 3.2 per cent – its lowest level since April 2021.
The July CPI data are good news for the Fed as it weighs the right time to start bringing interest rates down from a 23-year high.
The US central bank has been attempting to lower inflation to its long-term target of two per cent without crashing the economy or causing a surge in the unemployment rate.
Fed chair Jerome Powell suggested last month that the policymakers could cut rates “as soon as” September, if the data continue to come in as expected.