Washington, Aug 10 (EFE).- After reaching its highest level in four decades a month earlier, the United States’ inflation rate fell by six-tenths of a percentage point to 8.5 percent in July compared to the same month of last year.
The US Bureau of Labor Statistics, a unit of the Department of Labor, reported that result in an economic news release on Wednesday.
Relative to June, the BLS said the consumer price index was unchanged last month on a seasonally adjusted basis, attributing the result to a 7.7 percent drop in the gasoline index.
The BLS said energy prices as a whole were down 4.6 percent last month relative to June. While the indexes for gasoline and natural gas declined, the index for electricity increased.
Over the past 12 months, the overall energy index has soared by 32.9 percent and the gasoline index has surged by 44 percent.
Food prices, however, were up 1.1 percent in July relative to June, marking the seventh consecutive month they had risen by at least 0.9 percent.
Food prices increased by 10.9 percent compared to July 2021, with the cost of food at home rising 13.1 percent and the cost of food away from home climbing 7.6 percent.
Core inflation, which excludes volatile food and energy prices, rose 0.3 percent from June of this year and 5.9 percent from July 2021.
The cost of transportation services has risen 9.2 percent over the past 12 months, although that index was down 0.5 percent compared to June 2022.
Prices for new vehicles rose in July by 0.6 percent relative to the previous month and 10.4 percent compared to 12 months earlier.
Lower inflation provides a slight respite for the world’s largest economy, which has posted two consecutive quarters of negative gross domestic product growth.
An economic contraction over a six-month period has commonly been referred to as a “technical recession,” although President Joe Biden’s administration has avoided the “R word” and pointed to the US’s low 3.5 percent unemployment rate as proof of the economy’s robustness.
Biden referred to consumer prices in a tweet Wednesday, saying that “one-third of core inflation (last year) was due to high prices for automobiles because of the shortage of semiconductors.”
According to the president, the CHIPS and Science Law he signed on Tuesday will boost the US’s efforts to make semiconductors at home and put the country in the lead in that sector once again.
That law will provide tens of billions of dollars in incentives that encourage manufacturers of semiconductors, or chips, to make those components in the US.
The goal is to reduce American dependence on chips made abroad, particularly in China, while also bringing down consumer prices.
Despite the slight drop in July, high inflation remains the top concern of the Biden administration just three months prior to the November midterm elections.
Inflation also is the primary concern at present for the Federal Reserve, which raised its benchmark interest rate once again – to a target range of between 2.25 percent and 2.5 percent – on July 27. EFE