Clearing up on the inflation front in the United States

&Eacute ;Thinking on the inflation front in the United States

Inflation reached 8.5% in July in the United States, while analysts expected an increase of 8.7%.

Inflation slowed more than expected in July in the United States, driven by lower gas prices at the pump, bringing a breath of fresh air x27;oxygen to Joe Biden a few months before crucial elections.

Consumer prices rose 8.5% in July year on year, according to the Consumer Price Index (CPI) released Wednesday by the Labor Department, after rising 9.1% in June. , a 40-year high.

That's better than expected, as inflation was expected at 8.7% in July, according to MarketWatch consensus.

And over a month, inflation is even zero. This means that, against all expectations, prices did not increase compared to June, while inflation was 1.3% last month compared to May.

Inflation still remains at a very high level, which could prompt the American central bank (Fed) to raise its interest rates again sharply during its next meeting in September.

These figures made the happiness of Wall Street, which was about to open sharply higher at the time of their publication.

The dollar, on the other hand, was down against major competing currencies. Around 8:45 a.m., shortly before the opening of the markets, the greenback lost 1.21% against the European currency, at $1.04 for one euro, and lost 1.32% at $1.22. for one pound.

The US president welcomed signs that inflation may be starting to moderate.

I would just like to give a number, zero. Today we learned that our economy had 0% inflation in July, said Joe Biden, speaking from the White House.

< p class="e-p">For a year and a half, prices had hardly stopped climbing in the United States, eroding the purchasing power of households and, by extension, the popularity rating of the Democratic President.

His opponents accuse him of having an inflationary economic policy, due in particular to his generous stimulus plan in March 2021, just after his arrival in the White House.

Republicans reignited their criticism on Sunday, with the Senate passing the Inflation Reduction Act (the so-called inflation reduction bill). x27;inflation), which they instead accuse of generating unnecessary public spending.

The question now is whether it will be possible to sustainably slow inflation, without plunging the world's largest economy into recession, after already two quarters of contraction in gross domestic product.

The Fed is seeking to induce a voluntary slowdown in consumption, to ease pressure on prices.

It has thus raised its key rates four times, now between 2.25% and 2.50%. The rise encourages commercial banks to offer their retail and business customers credit with higher interest rates.

And the longer inflation remains, the more the Fed will raise rates.

However, before the pandemic, inflation was struggling to reach the 2% considered healthy for the economy. But it accelerated with global supply chain disruption and labor shortages in the United States as American households consumed frantically.

< p class="e-p">Added to this was the war in Ukraine, which sent fuel and food prices soaring.

Especially since the American labor market remains very dynamic. In July, the unemployment rate fell back to 3.5%, the same as before the pandemic.

But there are still nearly two vacancies for every available worker, driving wages to rising and contributing to inflation.

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