U.S. consumers got more welcome inflation relief in July, as falling gas prices helped offset continued increases in housing, food and other services.
Consumer prices rose 3.4% in July from a year earlier, down slightly from an annual rate of 3.5% in June, the Labor Department said Wednesday. Prices rose 0.1% from July to August on a seasonally adjusted basis.
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The figures were broadly in line with economists’ expectations.
Despite the cooling inflation rate, U.S. price growth is still running above the Federal Reserve’s 2% goal. Policymakers are expected to raise interest rates this fall if inflation remains high.
This follows last month’s steep inflation drop of 0.4% from May to June, the largest monthly decline since April 2020 at the start of the COVID-19 pandemic.
Overall inflation was pushed down by falling energy prices, which fell 1.5% for the month, led by a 2.9% decline in gasoline prices.
Still, energy remains significantly more expensive than a year ago, with the index up 14.7% and gas prices up 24.6%.
Housing costs remained a key source of inflation. Shelter prices rose 0.1% in July and accounted for roughly two-thirds of the overall monthly increase. Medical care prices rose 0.4%, while airline fares jumped 2.2%.
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