Annual inflation in the US accelerated to 3.2%

The consumer price index (CPI) in the US increased by 3.2% in July compared to the same period last year, reported US Federal Bureau of Labor Statistics. In June and May, annual inflation was estimated at 3% and 4%, respectively.

In monthly terms, prices, as a month earlier, rose by 0.2%. Core inflation also increased by 0.2% in July (does not take into account food and energy prices, the Core CPI index), also repeating the results of June. From January to May, this indicator grew by 0.4-0.5% monthly.

The increase in CPI, as noted by the statistical office, is largely due to the rise in housing prices (0.4% in monthly terms and 7.7% in annual terms). Food prices accelerated monthly growth from 0.1% in June to 0.2% in July. The rise in energy prices, on the contrary, slowed down to 0.1% after 0.6% a month earlier. Year on year, energy prices fell by 12.5%.

How notes Reuters, U.S. annual inflation accelerated for the first time in 13 months on the back of a low base in July last year, when prices eased after a 40-year record growth rate (9.1% peaked in June 2022). Analysts polled by the agency had expected inflation to rise 0.2% m/m and 3.3% y/y. According to Reuters, with continued moderate growth in consumer prices, the Federal Reserve System (Fed) may leave the rate unchanged at the next meeting.

July 26 US Federal Reserve raised key interest rate by 25 bp. p. – from 5-5.25% to 5.25-5.5% per annum. According to the regulator, the latest figures indicate that economic activity has grown at a moderate pace. Job growth has been robust in recent months, with unemployment low and inflation high.

At the meeting on June 14, the Fed kept the base rate at the level of 5-5.25% per annum. The next meeting on the key rate will take place on September 19-20.

July 9 US Secretary of the Treasury Janet Yellen statedthat the country is now “too high inflation.” According to her, the way to reduce inflation is connected with a “healthy labor market”. She added that, according to the data available to the Treasury Department, the United States is on this path. At the same time, she did not completely rule out the possibility of a recession in the country.