Inflation continues to fall in the US; possibility of a Fed rate cut increases

WASHINGTON (apro).-

The U.S. economy recorded a slight contraction of 0.1% in the inflation rate during June, bringing the annualized rate of the consumer price index to 3%, the Labor Department reported.

The Bureau of Labor Statistics (BEL) of the US federal government indicated that the brief inflationary reduction in the sixth month of 2024 was basically caused by the drop in the price of fuels, particularly gasoline.

The trend in fuel costs remains downward, falling by 2% in June, which maintains the constant reduction in the cost of gasoline, which fell by 3.6% in May of this year and 3.8% last month, according to figures released by BEL.

In another factor that contributes to the measurement of the inflation rate, it was announced that last month the price of food fell by 0.2% after having increased by 0.4% in May.

During the fifth month of 2024, the annualized rate of the United States macroeconomy was 3.3%, which compared to what was recorded last June means a decrease of 0.3%.

The new statistics released by the BEL bode well for the near future of US monetary policy.

Jerome Powell, the chairman of the US Federal Reserve, told a legislative committee this week that if inflation remains low in the coming months, interest rates may be cut in the third quarter of this year.

The Federal Reserve’s policy-making Open Market Committee wants an annualized inflation rate of 2% as its target for lowering the Federal Reserve’s short-term interbank lending surcharge.

Taking into account the cost of food and fuel in the inflation measurement, the Department of Labor reports that the annualized rate is 3.3%, the lowest statistic recorded in the macroeconomy since April 2021.