US consumer inflation slowed in July as energy prices recorded a temporary decline, offering some relief to households despite continued economic pressures.
According to data released Wednesday by the US Bureau of Labor Statistics, consumer prices increased by 0.1 percent in July compared with the previous month, while inflation was 3.4 percent higher than a year earlier.
Energy prices fell 1.5 percent during the month, but remained 14.7 percent higher year-on-year. Petrol prices dropped 2.9 percent from June but were still 39.1 percent higher than a year ago.
The temporary decline in energy costs came amid hopes that disruptions in the Strait of Hormuz would ease. However, those hopes have weakened, with oil prices rising again as shipping disruptions continue.
Brent crude futures rose 0.3 percent to $89.19 per barrel on Wednesday. The average US petrol price stood at about $4.03 per gallon, according to the American Automobile Association.
Food prices also increased slightly, rising 0.1 percent in July and standing 3 percent higher than a year earlier.
Economic Pressure Builds
The latest inflation figures come as the US economy faces signs of weakening in the labour market. The economy lost 23,000 jobs in the latest monthly report, with significant losses recorded in retail, local government and hospitality, although healthcare employment increased.
The figures are likely to keep pressure on the Federal Reserve, which is targeting inflation of 2 percent. The central bank kept its benchmark interest rate at 3.50–3.75 percent in July.
Economists remain divided over whether the Fed will keep rates unchanged or raise them at its September 16 meeting.
US financial markets reacted positively to the inflation data, with the Nasdaq rising 0.7 percent, the S&P 500 gaining 0.3 percent and the Dow Jones edging up 0.05 percent.
Gold, viewed as a safe-haven asset during periods of economic uncertainty, also climbed 1.4 percent to $4,428 an ounce.
With the US midterm elections approaching, inflation remains a major political and economic issue, with only two more inflation reports expected before the elections.
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