Inflation in the U.S. showed signs of cooling in July due largely to a decline in gasoline prices.
The Consumer Price Index (CPI) in the U.S. rose 8.5% in July from a year ago and was flat on a
monthly basis as energy prices declined 4.6% and gasoline prices fell 7.7%. Economists had
forecast that inflation would increase 8.7% on an annual basis and 0.2% monthly during July.
The better-than-expected results sent stocks soaring, with the Dow Jones Industrial Average
rising more than 500 points as investors cheered signs that inflation has peaked and is
beginning to moderate.
Excluding volatile food and energy prices, inflation in America gained 5.9% annually and 0.3%
monthly in July.
However, while energy prices declined, other consumer price categories rose in July. Food
prices increased 10.9% from a year ago, the fastest rise since 1979. And while gas prices at the
pump declined during the month, electricity prices rose 1.6% and were up 15.2% from a year
ago.
Additionally, shelter costs, which make up a third of the CPI, continued to rise and are up 5.7%
over the past 12 months.
Other categories that posted declines in July included used car prices, which fell 0.4%, apparel
prices that came down 0.1%, and transportation services that dropped 0.5%. Airline fares fell
1.8% during the month.
The U.S. Federal Reserve has raised interest rates by 2.25 percentage points so far this year to
lower inflation, and officials have indicated that more increases are on the way in coming
months.
Recent comments from Fed officials point to a potential third consecutive 0.75 percentage point
interest rate increase at the central bank’s next meeting in September.
