US Inflation Expected To Have Eased Slightly In July

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The US consumer price index is expected to see a slower rise in July as gasoline prices have fallen across the country, but inflationary pressures in the world’s largest economy will remain near a 40-year high.

According to economists polled by Bloomberg, the CPI data released Wednesday at 8:30 a.m. Eastern Time will show an annual increase of 8.7 percent compared to July 2021 and a 0.2 percent increase compared to June. These figures indicate a slight decrease in inflation compared to the annual increase of 9.1 percent and the monthly increase of 1.3 percent in June.

However, they are unlikely to represent a large enough shift to prevent the Federal Reserve from plowing through with more aggressive monetary policy tightening to contain inflation.

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While the core measure of CPI – which removes more volatile food and energy prices – is expected to record a smaller monthly increase of 0.5 percent compared to 0.7 percent in June, it is expected to accelerate year-over-year to 6.1 percent of 5.9 percent.

Inflation data will be released after a strong jobs report last Friday that dispelled fears of a near-term recession but suggested the Fed was struggling to cool the overheated economy.

It comes as the administration of President Joe Biden and congressional Democrats celebrate the passage through the Senate of a $700 billion climate, tax and health care bill that represents a critical pillar of the president’s economic agenda.

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Although they have called it the Inflation Reduction Act, the bill is not expected to have a significant effect on prices in the short term. Certain measures, however, aim to reduce costs in the medium and long term, including a provision that will allow the government to negotiate the prices of prescription drugs.

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