US Inflation Slows to 3.4 Percent
July data brings slight relief to American consumers, primarily due to slower food price growth and falling energy prices.
July data brings slight relief to American consumers, primarily due to slower food price growth and falling energy prices.
The U.S. Bureau of Labor Statistics reported that the annual inflation rate in the U.S. fell to 3.4 percent in July, down from 3.5 percent in June. According to Narodno.hr, the latest data point to a moderate easing of the burden on consumers, mainly due to slower growth in food prices and a decline in energy prices.
On a monthly basis, prices rose by 0.1 percent. Excluding food and energy, prices increased by 0.2 percent in July, while there was no monthly increase in June. The Wall Street Journal notes that the consumer price index rose just 0.1 percent in July, disappointing critics of new Federal Reserve Chairman Kevin Warsh who had hoped for a higher number.
The biggest pressure on household budgets continues to come from housing costs. Rents and other housing-related expenses make up a significant share of household spending, so even small increases have a large impact on overall inflation. In July, food prices rose very little and more slowly than the previous month, while energy prices fell, providing at least some relief for American citizens who have been feeling the effects of prolonged cost-of-living increases for years.
Narodno.hr reports that healthcare services and airline tickets became more expensive, while car insurance prices continued to decline.
New Federal Reserve Chairman Kevin Warsh said the main task of the central bank is to continue bringing down inflation, but without moves that would unnecessarily harm the economy. Donald Trump, meanwhile, acknowledges that inflation is still too high for many American families, particularly highlighting housing and food costs-exactly the expenses that hit citizens every month.
For the U.S. economy, July data is a good sign, but not yet a reason to celebrate. Inflation is falling, but a rate of 3.4 percent still means prices are rising significantly faster than the target level the central bank wants to achieve in the long run. Developments in the U.S. also matter for Europe. If inflation continues to weaken, more room will open for looser monetary policy, which could affect the dollar, interest rates, capital markets, and indirectly the European, including Croatian, economy.
