Inflation Drops Below 3 Percent for First Time in Years

According to the most recent Bureau of Labor Statistics (BLS) release on Wednesday, inflation decreased marginally year-over-year in July, as Americans’ finances continue to be constrained by rising prices and elevated interest rates.

According to the Bureau of Labor Statistics (BLS), the consumer price index (CPI) increased 2.9% on an annual basis in July and 0.2% month-over-month, as opposed to 3.0% in June.

This index is a comprehensive measure of the cost of commonplace goods. In July, the core consumer price index (CPI), which excludes the volatile categories of energy and food, increased by 3.2% year over year, as opposed to 3.3% in June.

Tomorrow Wednesday 8:30 AM
CPI & core CPI estimated
YoY 3.0% & 3.2% pic.twitter.com/VFUQuO2unN

— NOVA REAL INVEST (@novarealinvest) August 13, 2024

Inflation increased from 1.4% in January 2021 to 9% in June 2022, with July marking the first time the Consumer Price Index (CPI) has declined below 3% since President Joe Biden assumed office.

Inflation was anticipated to increase by 0.2% for the month and remain at 3.0% for the year, according to economists.

The BLS jobs report, which was disappointing, revealed that unemployment increased to 4.3% in July from 4.1% in June, which has sparked concerns of a recession.

Last week, the global market experienced a sell-off due to the increasing likelihood of a U.S. economic downturn. Japan’s Nikkei 225 index experienced its largest one-day decline since Black Monday in 1987, falling 12.40% on Aug. 5.

Nevertheless, the Nikkei index rose by 10.2% the following day, recouping a significant portion of its losses.

The Federal Open Market Committee (FOMC) maintained its federal funds rate target range of 5.25% to 5.5% on July 31, signifying the eighth consecutive meeting in which the FOMC declined to adjust the rate.

The cost of borrowing for consumers and businesses has increased significantly as a result of elevated interest rates.

Total revolving balances increased to $628.6 billion in the first quarter of 2024, the highest level of delinquent credit card balances since the Federal Reserve Bank of Philadelphia began monitoring the metric in 2012.