According to data released by the Bureau of Labor Statistics, the pace of consumer price hikes in Minneapolis has accelerated on an annual basis for the first time in over a year. The Consumer Price Index rose 3.2% for the year through July, up from June’s 3% annual increase. Despite this increase, economists believe that inflation is slowing down across a broader range of goods and services. The report also showed that underlying inflation continued to cool, with Core CPI increasing by 0.2% from June and 4.7% from the year-ago period, excluding food and energy prices. President Joe Biden stated that the latest CPI report demonstrates that the US economy remains strong. The Federal Reserve’s interest rate hikes over the past year have aimed to control inflation by reducing demand. The report has led to an increased probability of the Fed maintaining its interest rates at its September meeting. Economists suggest that while the increase in inflation may cause some anxiety, it does not necessarily indicate a return to the high inflation rates experienced last year. Prices for rents, new vehicles, and used vehicles are expected to decrease in the coming months, which will contribute to a decline in inflation. However, services sectors continue to experience significant price increases. While inflation has slowed down, it is still impacting consumers’ wage gains. Real average hourly earnings increased for the third consecutive month in July, but prior to May 2023, real earnings growth had been negative since March 2021. Despite improving consumer sentiment, consumer spending has decreased, which could be attributed to concerns about a potential recession. Additionally, high debt levels, increased interest rates, and limited access to credit are affecting consumer spending. Large corporate bankruptcies are also on the rise, which could have deflationary effects on the economy.
CPI: Consumer prices rose by 3.2% annually in July, picking up for the first time in 13 months
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