WASHINGTON: The headline rate of US consumer inflation eased more than expected last month, according to government data published on Wednesday, bolstering expectations that the Federal Reserve will cut interest rates next week.
A rate cut by the independent US central bank would act to boost demand in the world’s largest economy. That would give the Democratic party some good economic news to run on going into the final stretch of the 2024 presidential elections.
The consumer price index (CPI) slowed to 2.5 per cent in August from a year ago, down from 2.9 per cent in July and the lowest annual figure since February 2021, the Labor Department said in a statement.
This was slightly below the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal.Monthly inflation picked up by 0.2 per cent, in line with expectations.
“Today’s report shows that we are turning the page on inflation,” White House National Economic Advisor Lael Brainard said in a statement.“With inflation coming back down close to normal levels, it is important to focus on sustaining the historic gains we have made for American workers during this recovery,” she added.
Despite the good news on the headline rate, a measure of inflation that strips out volatile food and energy costs was largely unchanged on an annual basis, and rose by a larger-than-expected 0.3 per cent from a month earlier, indicating that underlying inflation remains sticky.
“It still seems that some of the inflationary pressures are still related to what we would call catch-up inflation,” Bernard Yaros, Oxford Economics’ lead US economist, told AFP.He pointed to a 0.6 per cent rise in motor vehicle insurance and the ongoing stickiness of the housing indices.