Topline
As rapid inflation continues to fuel recession fears, new data showed consumer prices rose 8.5% in the 12 months ending in July—slowing down for the first time in months in a potential sign that long-surging inflation may finally be slowing down.
Rising energy prices have elevated inflation readings during the pandemic to the highest level in … [+]
Key Facts
Economists were expecting prices to rise 8.7% on an annual basis after they spiked 9.1% in June.
Overall prices were unchanged from June—better than economist expectations calling for a 0.2% increase and much lower than the previous month’s increase of 1.3%, according to data released by the Labor Department on Wednesday.
The better-than-feared data was the result of a steep 7.7% decline in gasoline prices, which helped offset increases in food and shelter prices, the government said.
Core inflation, which excludes volatile food and energy prices, rose 0.3% against an expectation of 0.5%; prices for airline fares, used cars and apparel all fell, while those for housing, new vehicles and household furnishings increased.
In emailed comments Wednesday, Quadratic Capital Founder Nancy Davis said the consumer price index report is “likely a big relief” for the Federal Reserve as it works to combat decades-high inflation, which had accelerated in every month since April.
Key Background
Rising energy prices helped push inflation readings up to the highest level in decades during the pandemic, and stocks have struggled since the Federal Reserve started combating the surge in March by raising interest rates, which temper consumer demand by making borrowing more expensive. After rising 27% in 2021, the benchmark S&P 500 tumbled as much as 24% this year. Since mid-June, however, stocks have been on the mend—with the S&P climbing 12% as falling gas prices fuel hopes that the worst of the inflationary surge may be over.
This is a developing story. Please check back for updates.
Further Reading
Gas Falls Below $4 A Gallon For First Time Since March (Forbes)
Some Experts Are Warning Of A ‘Bear Market Rally’—Here’s Why Stocks Could Hit New Lows (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2022/08/10/inflation-cpi-july-prices/