The US CPI (Consumer Price Index) has surged to 8.5% YoY in July, showing an optimistic trend for the country’s economic growth The headline inflation has cooled down more than expected. In June, CPI data stood at a 9.1% YoY gain. Analysts are thinking that the multiple interest rate hikes by the US Federal Reserve have impacted the inflation data to pull down. In the last Fed FOMC meeting, the officials raised the interest rate by 75 bps. However, the inflation rate is expected to remain hot for some more time this year. The major reason behind the optimistic inflation data is a fall in gas rates and airfares in July. The gasoline prices in the US dropped for 57 consecutive days since reaching a high of more than $5 a gallon in June.
On a monthly basis, the price index did not move much in the last month. “That’s because fuel prices, airfares, and used cars declined in price, offsetting increases in rent and food costs. Core inflation was also slower than economists had expected on a monthly basis, climbing by 0.3%. In June, that figure was 0.7%. Today’s report is probably welcome news at the White House and the Federal Reserve, both of which have been waiting for inflation to decelerate. But it’s easy to overstate how much July’s slowdown matters. Inflation is still abnormally high. The decline owed in large part to gas prices, and they can always jump again” Reuters reports.
However, if the supply chain bottlenecks ease further in the upcoming months, the inflation rates can also continue to slow down.
As an immediate impact of the CPI data, gold rates in the Comex Futures have shown a sharp gain. December gold futures rate is quoted at US$ 1,819.60/oz, up by 0.40%, as the US Dollar index plunged significantly. The US currency index stood at 105.11, falling by 1.19%, at the time of writing.