US consumer inflation eases more than expected in June / Photo: © AFP/File
US consumer inflation eases more than expected in June
US inflation cooled more than expected in June, government data showed Thursday, a positive development for President Joe Biden as he fights to win confidence on his economic record in his reelection bid.
The consumer price index (CPI) rose 3.0 percent last month from a year ago, said the Labor Department, as a fall in gas prices more than offset housing costs.
A consensus forecast of analysts had pegged the inflation figure at 3.1 percent, down from 3.3 percent in May.
Meanwhile, a measure that strips out volatile food and energy prices saw the smallest annual rise since 2021.
The world's biggest economy has been on a bumpy path to reining in inflation, which soared to a blistering 9.1 percent in mid-2022.
This prompted the central bank to rapidly hike interest rates in hopes of easing demand and bringing down price increases.
Federal Reserve Chair Jerome Powell told lawmakers this week that there has since been "modest" progress.
In June, overall CPI declined 0.1 percent on-month for the first time since 2020, the latest Labor Department report showed.
The "core" CPI index excluding the volatile food and energy segments came in at 3.3 percent on-year, the smallest jump since April 2021.
The latest CPI report adds to a series of encouraging data that could give officials confidence that inflation is coming down to their two-percent target.
This, in turn, would allow them to start cutting decades-high interest rates.
The jobs market, another segment that Fed policymakers are monitoring, has also returned to a "strong, but not overheated" state, Powell said this week.
- Rate cut possibility -
A further deceleration in prices, alongside a cooldown in labor market conditions, would "support a change in message from the Fed" at its policy meeting this month, said Rubeela Farooqi, chief US economist at High Frequency Economics.
This could open the door to rate cuts as soon as the September meeting, she said.
But Dan North, senior economist at Allianz Trade North America, said: "We still have a ways to go yet."
He noted that shelter has been a major factor behind the stickiness of inflation, warning: "I don't see relief in the housing market for some period of time after the Fed starts to cut rates."
"Even if the Fed starts cutting in September, it’s going to be months and months before we see enough significant movement in the 30-year mortgage to make a difference," he told AFP.
T.Ward--TNT
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