US inflation cools to slowest pace in a year

Price increases in the United States slowed down in June, raising hopes that the world's largest economy is recovering from the high inflation that followed the pandemic. Over the 12 months leading up to June, prices rose by 3%, marking the slowest rate of inflation in a year, thanks in part to lower petrol prices, according to the Labor Department. This is the third consecutive month that inflation has decreased, easing financial pressures on households and potentially paving the way for the US central bank to lower interest rates as early as September. The Federal Reserve's key lending rate has been above 5. 3%, a level not seen in roughly two decades, since last year. Federal Reserve officials have stated that high borrowing costs are slowing down the economy, which helps to reduce the pressures that drive up prices. Analysts believe that the latest report could persuade the bank that it has done enough to address the issue. From May to June, prices actually fell by 0. 1%, marking the first outright monthly decline in years. 'The latest inflation numbers put us firmly on the path for a September Fed rate cut,' said Seema Shah, chief global strategist at Principal Asset Management. This progress is welcome news for the White House, which has been grappling with widespread economic dissatisfaction as rising living costs and interest rates squeeze households. Over the past year, petrol prices and the cost of cars and appliances have decreased, but the cost of other essentials has continued to rise. Grocery prices have increased by 1. 1% since June 2023, while housing costs have climbed by 5. 2%. The cost of fruits and vegetables is still going up. Last month, the increases in rents and prices for services such as veterinary treatment slowed down, noted Greg McBride, an analyst for Bankrate. com. 'Shelter and services costs have been the long-standing and persistent trouble spots in the inflation readings, but maybe the tide is starting to turn,' he said. At hearings in Washington this week, Republican lawmakers warned Federal Reserve Chairman Jerome Powell that a rate cut ahead of the November election would be perceived as an attempt to 'gin up the economy' for the president. Mr. Powell refused to speculate about when the Fed would make its next move but defended the bank's political independence and said its decision would be based on data. He told lawmakers that a cut was the most likely next step, noting that the bank was alert not just to inflation figures but also to signs that the economy was slowing. 'We're very much aware that we have two-sided risks now and we're determined to balance those as best we can,' he said. 'We want to see more good inflation data and we also want to continue to see a strong labor market. ' In June, the US unemployment rate crept above 4% for the first time in more than two years.