Posted by Mathieu Tancrez on 8/14/2024
The US Consumer Price Index for All Urban Consumers (CPI-U) was recently released at 314.540, marking a 2.9% increase compared to July 2023's figure of 305.691. It is slightly below the expected 3.0% and marks a key development in the Federal Reserve's ongoing efforts to manage price stability. This is a decrease from June's inflation rate of 3.0%, and it is the first time since 2021 that the inflation has dipped below 3.0%.
On a monthly basis, the CPI rose by 0.12%, primarily driven by increases in shelter costs, which were up 0.4% for the month. However, this was somewhat offset by declines in categories such as used vehicles, which saw a significant 2.3% drop. Energy prices also contributed to the overall trend, with gasoline prices down by 2.2% over the past year.
The relatively subdued inflation figures are reinforcing expectations for a potential rate cut by the Federal Reserve in September 2024. Analysts are currently debating whether the Fed will opt for a 25 basis point cut or a more aggressive 50 basis point reduction. The July CPI report supports the argument for a smaller cut, as inflation appears to be moderating without the need for drastic action​.
The CPI for August is scheduled to be released on September 11th.