by Christopher Ragber
WASHINGTON (AP) — Falling gas prices gave Americans a little respite from the pain of high inflation last month, even as headline price growth slowed slightly from a four-decade high in June.
Consumer prices rose 8.5% yoy in July, the government said on Wednesday, after rising 9.1% yoy in June. On a monthly basis, prices were flat from June to July, the smallest such increase in two years.
Still, the prices of a wide range of goods and services are rising, putting most Americans in a worse position. Average wages are rising faster than they have been in decades — but not fast enough to keep up with rising costs for food, rent, cars and medical care.
President Joe Biden has called the fall in gas prices a sign that his policies – including the large release of oil from the country’s strategic reserves – are helping to cushion the high costs that have hit Americans’ finances in particular. This is particularly distressing for low-income Americans and blacks and Hispanics. Household.
Still, Republicans emphasize the persistence of high inflation as a top issue in midterm congressional polls, with polls showing higher prices have severely eroded Biden’s approval ratings.
On Friday, the House of Representatives will give final congressional approval to a revived tax and climate package being pushed by Biden and Democratic lawmakers. Economists say the measure, dubbed the Inflation Reduction Act by its supporters, will have minimal impact on inflation over the next few years.
While there are signs that inflation may ease in the coming months, it is likely to remain well above the Federal Reserve’s annual target of 2% for next year or even 2024. Chairman Jerome Powell said the Fed needs a series of monthly declines in core inflation readings before it considers halting rate hikes. The Fed has raised its short-term benchmark interest rate in its last four rate-setting meetings, including a three-quarter-point hike in June and July — the first major hike since 1994.
A blockbuster July jobs report released by the government on Friday — with 528,000 jobs, rising wages and an unemployment rate falling to a half-century low at 3.5% — bolstered expectations that the Fed could hold another three-quarters. -Bindu will announce the increase at its next meeting in September. Strong hiring fuels inflation because it gives Americans more collective purchasing power.
One positive sign, however, is that according to a survey by the Federal Reserve Bank of New York, Americans’ expectations for future inflation have fallen, possibly reflecting the fall in gas prices that most consumers are seeing.
Inflation expectations can be self-fulfilling: if people think inflation will stay high or get worse, they can take actions – like demanding higher wages – that push prices into a self-perpetuating cycle. can send higher. Companies often raise prices to offset their higher labor costs. But a survey by the New York Fed found that Americans expect inflation to be lower in a year, three and five years from what it was a month ago.
Supply chain disruptions are also easing as fewer ships depart from Southern California ports and shipping costs decrease. The prices of commodities such as corn, wheat and copper have fallen drastically.
In categories with stronger price changes, such as B. rents, but the costs continue to rise. A third of Americans rent their homes, and the higher cost of renting means many of them have less money to spend on other things.
Bank of America data from its customer accounts shows that rent increases are hitting young Americans particularly hard. Average rent payments for tenants known as Generation Z (born after 1996) rose 16% year over year in July, while the increase for baby boomers was just 3%.
Persistent inflation is not just an American phenomenon. In less developed countries like the UK, Europe and Argentina, prices have skyrocketed.
In the UK, inflation rose to 9.4% yoy in June, a four-decade high. Among the 19 countries using the euro currency, it rose to 8.9% year on year in June, the highest on record for the euro.