US annual inflation slows to 8.5%
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US consumer prices rose 8.5% year-on-year in July after a 40-year high of 9.1% in June, writes Bloomberg.
It is noted that gasoline prices fell the most (by 7.7%), which was the largest drop since April 2020, but this is offset by a 10.9% increase in food prices (the highest increase since 1979).
According to the agency, these figures turned out to be less than analysts’ expectations and will to some extent reduce the pressure exerted on the US Federal Reserve System.
On July 27, the US Federal Reserve announced an increase in the base interest rate by 75 basis points – up to 2.25-2.5% per annum. This rate increase was the fourth in the last six months. In March, for the first time since 2018, the regulator raised the rate by 0.25 percentage points to 0.25-0.5% per annum. The next increase took place in early May – immediately by 0.5 percentage points to 0.75-1%. The last time the Fed raised the rate was on June 15 by 75 bp. p. – up to 1.5-1.75% per annum. This was the biggest increase since 1994.
At the end of July, the US Department of Commerce reported that, according to preliminary estimates, the country’s gross domestic product (GDP) got down by 0.9% in the II quarter year on year. The recession of the American economy has been going on for two quarters. According to the results of the first quarter, it amounted to 1.4%.
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