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The drop in gasoline gives a truce to inflation in July in the United States

2022-08-10T13:02:56.466Z

The year-on-year rate of price rise remains at 8.5% The car is integral to the American way of life. Except in the big cities, it is inconceivable to live without it. Filling the tank had become a nightmare for drivers, accustomed to much lower prices than Europeans. Gasoline has been the main engine of inflation in the last year and its drop of 7.7% in July has allowed a respite. After a four-decade high of 9.1% in June, inflation has eased to 8.5



The car is integral to the American way of life.

Except in the big cities, it is inconceivable to live without it.

Filling the tank had become a nightmare for drivers, accustomed to much lower prices than Europeans.

Gasoline has been the main engine of inflation in the last year and its drop of 7.7% in July has allowed a respite.

After a four-decade high of 9.1% in June, inflation has eased to 8.5% in July, the first month in a long while that prices haven't risen, according to the Bureau of Labor Statistics.

Inflation remains well above the 2% target set by the Federal Reserve.

At its last monetary policy meeting, the central bank said it would scrutinize any new data ahead of its next meeting on September 20-21.

In the previous two, interest rates have been raised by 0.75 points and another rise is expected in September, which will depend on how prices and the economy evolve.

The figure for July was somewhat lower even than what the economists expected and the stock markets reacted upwards.

Although the pump is beginning to take a breather thanks to the evolution of crude oil prices, it is unpredictable how long it will last.

Meanwhile, the shopping cart continues to upset Americans, with food prices not seen in decades.

Food to eat at home rose at a rate of 13.1%.

Inflation, which both the Biden administration and Federal Reserve Chairman Jerome Powell hoped would be transitory, has been entrenched and partially translated into wage increases.

The index that does not include food and energy, core inflation, remains at 5.9% year-on-year.

A drop of 0.6 points in year-on-year inflation and the foreseeable cooling of the economy give rise to hope that 9.1% was the highest peak of inflation.

Gasoline prices continue to slide in August and the central bank is determined to move hard to contain it, even if it comes at the price of triggering a full-blown recession.

The gross domestic product, according to provisional estimates published two weeks ago, has fallen for two consecutive quarters, the labor market remains strong and the unemployment rate has equaled the pre-pandemic minimum, which is also the lowest level in the last half century: the 3.5%.

In the United States, the semi-official rating of business cycles is carried out by a private technical body that uses various indicators.

The problem is that it takes a long time to do its job and often does not certify an entry into a recession until it has already come out of it.

After strong and unexpected job creation in July, the United States has a record number of jobs.

Economists, however, predict a cooling of the labor market as a result of the rise in interest rates.

Joe Biden is aware that the more prices rise, the more his popularity falls.

The shopping basket was the star issue before the mid-term legislative elections, which are held on November 8, although it has now been overshadowed by Donald Trump's legal problems with the registration of his mansion in Mar-a- Lake.

Before the elections on November 8, two other inflation data, August and September, must still be published.

Biden has named his flagship project the Inflation Reduction Act, although it will have hardly any effect on the price level in the short term.

The House of Representatives is expected to approve the law this Friday after the marathon session on Sunday in which it obtained the green light in the Senate.



Source: elparis

All business articles on 2022-08-10

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