Inflation slows significantly in July as gas prices fall

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Last Updated on August 11, 2022 by Bitfinsider

Inflation data released on Wednesday showed that price increases slowed in July, easing the strain on household budgets as the Federal Reserve fights inflation with a series of interest rate hikes.

While prices remain high, they have slowed from the near-historic pace seen in June, giving policymakers and consumers hope that inflation has peaked.

According to the Bureau of Labor Statistics, the consumer price index, or CPI, rose 8.5% year on year in July, down from 9.1% in June.

According to the bureau, the consumer price index rose 1.3% on a monthly basis in July, remaining unchanged from the increase seen in June. While food and shelter costs have risen in the last month, the gasoline index price fell 7.7% in July to compensate.

President Joe Biden praised the inflation data during a bill-signing ceremony at the White House on Wednesday, saying it showed “some signs” that price increases in the United States may be “beginning to moderate.”

He did warn that the fight against inflation is “far from over,” as global challenges such as the Ukraine war, supply chain disruptions, and COVID-19 shutdowns in Asia could cause “additional headwinds in the months ahead.”

The inflation data comes as other economic indicators have sent conflicting signals in recent weeks.

Meanwhile, according to a government report released on Friday, hiring in July more than doubled economists’ expectations, defying Fed efforts to slow the economy and dispelling fears of a recession.

The significant increase in hiring last month – an additional 528,000 jobs and a drop in the unemployment rate to 3.5% – coincided with elevated wage increases, which may put upward pressure on consumer prices.

The increased wage increases follow a pattern that has been in place for several months. According to data released by the federal government on Tuesday, unit-labor costs in the United States rose 9.5% in the second quarter of this year, the fastest increase since the first quarter of 1982.

When faced with high inflation, policymakers are concerned about what is known as a price-wage spiral, in which a rise in prices prompts workers to demand raises to help them afford goods, which in turn pushes up prices, resulting in a self-perpetuating cycle of runaway inflation.


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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.

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