US Inflation Eases To 8.5pc As Fuel Prices Dip

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2022-08-10 HKT 22:16

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  • With energy costs dropping in recent weeks, the consumer price index has dipped to an annual rate of 8.5 percent in July. File photo: AFP

    With energy costs dropping in recent weeks, the consumer price index has dipped to an annual rate of 8.5 percent in July. File photo: AFP

US inflation eased slightly in July, according to official data on Wednesday, potentially taking pressure off the Federal Reserve to hike interest rates sharply while bringing a much-needed boost to President Joe Biden just months before crucial midterm elections.

With energy costs dropping in recent weeks, the consumer price index dipped to an annual rate of 8.5 percent last month, the Labour Department reported, lower than markets were projecting.

Fueled by aggressive consumer spending of pandemic savings, global supply chain snarls, domestic worker shortages and Russia's war on Ukraine, inflation soared 9.1 percent on-year in June, the highest in 40 years.

But the CPI was unchanged compared to June, a dramatic decline from the big increase in the prior month and defying expectations of a modest rise.

And when volatile food and energy prices are excluded from the calculation, the so-called core CPI rate rose just 0.3 percent – the smallest in four months, according to the report.

Soaring prices have continued to climb in the United States, squeezing family budgets and, by extension, Biden's popularity.

But the White House cheered the report. "Our economy had zero percent inflation in July. ZERO PERCENT," White House economic spokeswoman Emilie Simons tweeted.

"No doubt there is more work to do, but we are on the right track," she added.

Biden's opponents accuse the president of precipitating inflation with a gigantic US$1.9 trillion coronavirus relief package, enacted in March last year shortly after assuming office.

And Republicans renewed their criticism of Biden's economic policy, warning that Sunday's passage in the Senate of his massive climate and health care bill titled the "Inflation Reduction Act," would do the opposite of its stated purpose. (AFP)