Despite recent indications that inflation is slowing down, the battle to stem the skyrocketing price hikes of the previous three years is far from over.
Two surveys released last week that showed the rate of rise in both the prices consumers pay at the register and the prices businesses pay for the products they use had fallen to multi-year lows gave financial markets cause for confidence.
However, data points only showed relative rates of change and failed to show the total increase that brought inflation to its greatest level in more than 40 years.
Additionally, there are still unsettling economic undercurrents, such as rising fuel prices and a congested housing market, that could lead to issues in the future. No winning laps. Nothing was achieved.
In an interview with CNBC’s Squawk Box on Monday morning, Jared Bernstein, the head of the White House’s Council of Economic Advisers, said, Our work is not done. But we’re glad to see that American homes have some breathing room.
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Declining Inflation Signals Potential Monetary Policy Adjustment
With merely a 0.2% increase in June, the consumer price index, a widely used indicator that covers a variety of products and services across several industries, brought its annual rate to 3.1%.
The latter percentage is at its lowest level since March 2021 and is down sharply from its 9.1% peak from a year ago, which was the highest in over 41 years.
Also last week, the Labor Department revealed that the producer price index increased by the same amount annually and by just 0.1% in June.
In March 2022, the 12-month PPI reading reached its highest point in data going back to November 2010 at an annual rate of 11.6%.
Sharp drops in both measures gave rise to hopes that the Federal Reserve could loosen up on interest rate hikes and the strict monetary policy it has been enforcing since the beginning of 2022 as inflation approaches its 2% objective.
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Source: www.cnbc.com