According to data released by the US Department of Labor Statistics, the Consumer Price Index stood at 0.5% in July, in line with expectations and lower than June’s 0.9%. In yearly terms, the CPI rose by 5.4%, over expectations of 5.3% and the same as the previous month.
Excluding food and energy prices, the CPI rose by 0.3%, below expectations of 0.4% and the previous month’s 0.9%. In yearly terms, the CPI rose by 4.3%, lower than the previous month’s 4.5% and in line with expectations.
Apparently, inflation has been decelerating in certain sectors that previously contributed significantly to the rise of prices. Used car and truck prices rose by 0.2% in June, which contrasts with the 10% increase of the previous month. Clothing prices increased by 0.7% while transportation prices rose by 1%.
This data supports the idea that recent inflationary pressures are transitory and that inflation levels peaked recently, ideas that have been promoted by the Federal Reserve's policymakers.
“Today’s CPI data should help assuage investor fears that the Fed is too laid-back about inflation pressures,” commented an analyst at Principal Global Investors. “The details of the data release suggest some easing in the reopening and supply-shortage driven boost to prices, and tentatively suggests that inflation may have peaked. Investors in the transitory camp will feel slightly vindicated.
These data also cast doubts on the idea that the Federal Reserve will eventually hike interest rates.
Recently, the United States government approved a $1t infrastructure bill after Congress failed to agree on a comprehensive plan for years. The bill was supported by all 50 Democrat senators, as well as 19 Republicans, making this a bipartisan bill.
Despite the good news, the United States continues struggling with the spread of the Delta variant of the COVID-19 virus, which threatens to hinder economic recovery.
Since the beginning of the pandemic, 37,060,454 COVID-19 cases have been reported in the United States, including 635,219 related deaths, making it the most affected country in the world, followed by India, Brazil, Russia and France. The government is now trying to advance a massive vaccination campaign, though it is still facing resistance from a fraction of the population. So far, 353 million vaccine doses have been distributed among the population with 167 million individuals now fully vaccinated, which accounts for 50.8% of the total population.