ALBAWABA – United States (US) government data released Thursday showed US consumer price inflation sped up slightly in July for the first time in nearly a year, after nearly a dozen interest rate hikes by the Federal Reserve (Fed).
The consumer price index (CPI), a key inflation gauge, rose 3.2 percent from a year ago in July, slightly up from June's 3.0 percent, breaking a streak of disinflation.
The Federal Reserve hiked US interest rates last month to the highest levels since 2001, according to Agence France-Presse (AFP).
Fed officials said they will remain dependent on data for further rate decisions in order to maintain a fine balance while lowering inflation without tipping the economy into recession.
The CPI held steady in July on a month-on-month basis, rising at the same pace as in June, according to US Labor Department data.
"The index for shelter was by far the largest contributor to the monthly all items increase, accounting for over 90 percent of the increase, with the index for motor vehicle insurance also contributing," the department said.
Excluding the volatile food and energy segments, "core" CPI rose 4.7 percent from a year ago, as reported by AFP.
"While inflation is still far above target, and the annual change in headline CPI picked up in July, core prices are moving in the right direction," Rubeela Farooqi, chief US economist at High Frequency Economics, told AFP.
Analysts had expected a slightly higher headline CPI reading as well, according to MarketWatch.
Farooqi added that the July figures will be "welcome news to policymakers".
The Fed has set the longer-term target for inflation at two percent.
However, the current pace still reinforces holding monetary policy at a restrictive stance for some time to bring prices back down, she said.
Consumer inflation hit 9.1 percent on an annual basis in June 2022, and has been cooling since then.
This CPI reading "doesn't imply mission accomplished for the Fed," added Ryan Sweet, chief US economist at Oxford Economics.
"Still, we expect the Fed to skip rate hikes in September and November, when inflation should have decelerated even further," he said in a note, carried by AFP.
Though Sweet expects the Fed to halt further rate hikes he said the central bank is unlikely to cut rates until early next year to ensure that it wins the inflation battle.
