The Federal Reserve is analyzing a key inflation measure which has shown a continued slowdown in price increases. This decrease in inflation is paving the way for the Fed to potentially cut its key interest rate next month, marking the first decrease in 4 1/2 years. In July, prices only grew by 0.2%, slightly surpassing the 0.1% rise from the previous month, while inflation remained steady at 2.5% compared to the same time last year.
This decline in inflation may disrupt former President Donald Trump’s efforts to blame Vice President Kamala Harris for the rise in prices. However, despite the reduced inflation rates, many Americans are still grappling with high average prices for essentials like gas, food, and housing compared to pre-pandemic levels. Core inflation, which excludes volatile food and energy costs, also increased by 0.2% from June to July, reflecting a stable 2.6% rise from the previous year.
Economists are closely monitoring core prices as they provide insights into future inflation patterns. The data released on Friday indicates a gradual decline in inflation in the United States after enduring three challenging years of steep price hikes that strained many households’ budgets. In June 2022, inflation peaked at 7.1%, the highest level in four decades.
