In July, inflation reached 8.5% compared to a 40 year high of 9.1% in June, providing a measure of relief for consumers as gas prices fall.
Injuries predicted by economists to fall to 8.7% in July, according to The Wall Street Journal. On a month-to-month basis, the Consumer Price Index reading was unchanged from June, meaning no price growth was registered. That compares to June's month-on-month increase of 1.3%.
The price of gasoline is one of the factors driving inflation. Last month, prices fell 7.7%, according to the Bureau of Labor Statistics. While gas prices are still up 44% from a year ago, the recent multiweek decline helped cool off overall price growth in the economy. The national average price was $4.01 per gallon, according to AAA, about a dollar less than in June.
A Deump has been aggrehasizing sallen ves by the Federal Reserve to increase interest rates. The U.S. central bank hopes to curb demand for goods and services and put downward pressure on prices by makiwing more expensive.
Demand for gasoline is falling along with oil prices, which have declined from more than $120 dollars per barrel in June to about $97 per barrel on Tuesday.
Federal Reserve officials are signaling that they will continue their hard stance against inflation even though the declines continue. They are facing a U.S. economy that continues to add jobs at a breakneck pace. The Bureau of Labor Statistics said last week that the U.S. economy piled up another 528,000 new payrolls, a sign that demand for labor remains strong.
The pay for private sector workers is rising at a rate that is putting upward pressure on prices. In the second quarter, wages and sal ries grew 5.8% compared with a year earlier, the fastest rate for records tracing back to 2001, although that is still below the current inflation rate.
As part of its efforts to raise its k, a member of the Federal Reserve Board of Governors, raised its ey rate by 0.75% in late July, its fourth rate-hike of the year.
According to CNBC, Federal Reserve Governor Michelle Bowman said in recent prepared remarks for the Kansas Bankers Association that he believes that similar interest rate increases should be on the table until inflation declines in a consistent, meaningful, and lasting way.
San Francisco Fed President Mary Daly said Sunday that the Fed is not done yet with its work to fight inflation. Americans are losing ground every day. Daly said that the focus has to be on bringing inflation down.
The Fed is hawkish and is putting pressure on stock prices.
While inflation abates and the Federal Reserve balances its priorities away from inflation and toward growth, tempting rallies are likely to remain unsustainable, Seema Shah, chief strategist at Principal Global Investors, wrote in a note to clients this week.