United States: Inflation declines to lowest level since March 2021 in July
Inflation came in at 2.9% in July, which was down from June’s 3.0%, below market expectations, and the lowest inflation rate since March 2021. Slower price rises for housing and transport drove the downtick.
The trend was unchanged, with annual average inflation coming in at June’s 3.3% in July. Meanwhile, core inflation fell to 3.2% in July from the previous month’s 3.3%.
Finally, consumer prices rose 0.15% in July over the previous month, contrasting June’s 0.06% drop.
On the monetary policy implications, TD Economics’ Thomas Feltmate said:
“With the labor market showing clear signs of cooling and inflationary pressures subsiding, the Federal Reserve can confidently start to dial back its policy rate in September. […] we expect three quarter-point rate cuts from the Fed by year-end.”
Desjardins’ Francis Généreux said:
“After disappointing data in the first few months of 2024, price movements have been much more encouraging in the past three months. This keeps the door open for the Federal Reserve to start cutting rates at its September meeting.”