Price increases slowed more than expected in July, and the Consumer Price Index (CPI) fell below 3% for the first time in more than three years. That opens the door for the Federal Reserve to cut interest rates next month after years of battling inflation that has pushed rates to a 23-year high. The U.S. economy is showing signs of strain, and now that inflation appears to be under control, the Fed could lower borrowing costs to try to revive job growth.
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Consumer prices rose 2.9% in the 12 months ended in July, slowing from a 3% annual increase in June, according to the Bureau of Labor Statistics’ latest report released Wednesday. On a monthly basis, prices rose 0.2% after falling 0.1% in the previous month. Economists had expected a 0.2% monthly increase and a 3% annual gain, according to the Fact Set consensus forecast.
“Getting past the 3% mark is a significant psychological positive,” Sung Won Sohn, a professor of finance and economics at Loyola Marymount University and chief economist at SS Economics, said in an interview with CNN.
Excluding gas and food, categories that tend to be quite volatile, core CPI rose 0.2% from June and the annual rate slowed to 3.2% from 3.3%.
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