Recent official figures indicate that US inflation has continued to decline, bolstering expectations that the US central bank may lower interest rates in the upcoming week.
In the year leading up to August, consumer prices increased 2.5% despite declines in the costs of petrol, used cars and trucks, and several other items.
The latest figures indicate the slowest growth rate since February 2021, a decline from 2.9% in July, even with an unanticipated increase in housing expenses.
Recent figures from the Labor Department emerge amid a presidential campaign where escalating living costs have taken centre stage.
Analysts indicated that the data has heightened the probability of a 0.25 percentage point interest rate cut by the Federal Reserve at its upcoming meeting while diminishing the chances of a more substantial reduction.
“While inflation seems to have been largely controlled, the persistent rise in housing costs remains a concern, indicating that it has not been entirely subdued,” stated Paul Ashworth, chief North America economist at Capital Economics.
Recent data indicates the upward pressure on prices for essential household goods is diminishing.
According to the report, grocery prices, which experienced significant increases just a few years back, remained stable from July to August and have risen by less than 1% compared to last year.
The price of petrol, a crucial commodity, has declined. It has decreased over the past month and has dropped by more than 10% since August 2023.
Nevertheless, the costs of various other goods persisted in their upward trajectory.
Excluding the volatile categories of food and energy, prices increased 3.2% over the past year. This rise was driven by higher costs of airline tickets, car insurance, rent, and various housing expenses.
“This serves as a reminder to remain cautious despite several months of improved inflation data,” stated Brian Coulton, chief economist at Fitch Ratings.
“While it may not be sufficient to prevent the Federal Reserve from lowering interest rates later this month, the persistent nature of services inflation is expected to contribute to a more cautious approach in rate cuts over the coming year.”
Central banks, notably the Federal Reserve, began increasing borrowing costs two years ago to combat rising inflation.
In 2021, prices surged worldwide, attributed to supply chain disruptions linked to the pandemic and increased government expenditures.
Russia’s invasion of Ukraine in 2022 led to a significant spike in oil prices, exacerbating global inflationary pressures.
In June 2022, inflation in the United States peaked at 9.1%. However, it has since declined to a level closer to the 2% rate deemed healthy for the economy.
All items are marked with red tags
Jasmine Loeber, a stay-at-home mother residing in Pennsylvania, expressed her astonishment over the rising prices in recent years by sharing her costly supermarket purchases on social media.The 26-year-old informed that prices have recently begun to trend towards greater affordability.
She continues to shop strategically, avoiding specific brands and favouring retailers recognized for their affordability. However, she is now noticing an increase in discounts.
“I’ve observed that, in recent months, red tags have appeared on nearly all items,” she remarked, noting that her family has just taken its first vacation in three years.
She expressed that broader financial pressures, particularly housing costs, were significant enough that she intended to limit her family to just one child.
The most recent statistics received minimal attention following the initial debate, coinciding with political leaders commemorating the anniversary of the September 11 attacks on New York’s World Trade Center.
Jasmine, a crucial battleground state resident for both campaigns in the upcoming November election, revealed that she did not participate in the 2020 vote and expressed uncertainty about her voting intentions this year.
“It is difficult to accept that any meaningful action will be taken,” she stated.
