Inflation in the United States slower than expected in August

Inflation in the United States slower than expected in August

Inflation in the United States slower than expected in August

The sharp fall in petrol prices has brought down inflation. (Photo: 123RF)

WASHINGTON — Inflation in the United States slowed slightly in August, driven by lower gasoline prices, while rents or food continued to climb, a thorn in the two-month midterm election in Biden’s favor.

According to the CPI index released by the Labor Department on Tuesday, consumer prices rose 8.3 per cent year-on-year in August from 8.5 per cent in July. However, the slowdown disappointed analysts, who saw inflation pegged at 8%.

On Tuesday afternoon, when Wall Street ended its session in the red because of these figures, hundreds of people gathered at the White House to celebrate the text Joe Biden had recently adopted, and was baptized. Inflation’ or “Act on reduction of inflation” Reduction Act”.

The 79-year-old Democrat, wearing a shirt sleeve and sunglasses on his nose, said: “With this law, the American people won, and the lobby lost!”

He said the “Inflation Reduction Act”, which is named to stick to current events but which is actually a program of environmental and social reforms, “is going to make a big difference to middle and working-class families”. “, he assured. ,

A few weeks before the legislative elections in November, Joe Biden also insisted that no Republican opposition lawmaker had supported the text, which promises, for example, to reduce the exorbitant costs of some common drugs like insulin. For.

“Stubby Persistent” Inflation

“Inflation remains stubborn,” said Cathy Bosjanic, chief economist at Oxford Economics, in a note.

Because in a month, prices started rising again, +0.1% compared to July, while a slight decline was expected and inflation dropped to zero between June and July.

Filling at the service station certainly costs much less than in July (-10.1%). A welcome respite in a country where cars are often just as heavy as they need to be, and when gasoline prices had soared since the start of the war in Ukraine.

Prices for airline tickets and used cars also fell.

But that wasn’t enough to offset growth for most other products. Housing, food, medical care, new cars… the increase has been “normalized,” the Labor Department details in its press release.

Natural gas and electricity prices also continued to rise.

“Ouch. Grows [de prix] much larger than expected across a wide range of categories,” notes economist Ian Shepherdson of Pantheon Macroeconomics in a note.

So-called implied inflation, calculated on all prices except food and energy, thus accelerated to +6.3% in one year (against +5.9% in July) and +0.6% in one month (against +0.3% in July). happened. ,

For a year and a half, prices in the United States have been rising, reducing domestic purchasing power. Inflation hit its highest level in more than 40 years in June, before slowing in July.

“hurry”

These figures made the dollar a “safe haven,” jumping against other major currencies on Tuesday, as they should convince the US central bank (Fed) to tighten its grip on the fight against inflation, with a fistful of fists. Monetary policy.

In concrete terms, it is gradually raising its prime rates, prompting banks to increase interest rates on loans to individuals and businesses. Then they are less inclined to consume and invest, which reduces the pressure on prices.

The Fed may raise them by three-quarters of a percentage point on September 21, at the end of its next meeting, as in June and July. It had not previously resorted to such growth since 1994.

“Time is running out,” warned its president, Jerome Powell, on Thursday.

This deliberate slowdown in economic activity, however, risks leading to a recession, and should, in any case, push up unemployment, which has already risen slightly to 3.7% in August.

However, the job market remains in excellent health and is facing labor shortages, which gives the Fed some leeway.

The CPI index is used to index pensions. The Fed, which aims to bring inflation back to around 2%, supports another measure, the PCE index, whose growth slowed in July (+6.3% in a year).