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Inflation Slows Slightly in July while Democrats Pass the Inflation Reduction Act

Consumer prices grow at a slower pace in July but are still far above the ideal rate of inflation as Democrats pass their coveted economic package.
Inflation Slows Slightly in July while Democrats Pass the Inflation Reduction Act

US inflation grew at a slower pace than expected in July, according to the latest government figures, easing pressure on the Federal Reserve to deliver another super-sized interest rate hike, reports Sky News.

Slower inflation growth eases pressure on US Fed to hike interest rates (Sky News)

Excerpt from Sky News: Consumer prices jumped by 8.5% in July compared with a year earlier, down from the 9.1% year-on-year jump in June. On a monthly basis, prices were unchanged between June and July, for the first time in more than two years. Following the inflation news, traders slashed bets that the Federal Reserve would deliver a third consecutive 75-basis-point hike. A 50-basis-point rise is now widely expected when the central bank meets in September. It has indicated that it will need to see several monthly declines in inflation growth before letting up on its aggressive monetary policy tightening. Rob Clarry, investment strategist at UK wealth manager Evelyn Partners, said: "While today's downside surprise is likely to be welcomed by investors, the data does not change our view that US interest rates will continue to increase."
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As the national average price of a gallon of unleaded gasoline in the U.S. dropped to just below $4 a gallon for the first time since March, new data released Wednesday showed that prices rose 8.5 percent from a year ago, but that’s an improvement from June, when prices climbed 9.1 percent. The monthly inflation rate was also flat, meaning that overall, prices didn’t pick up from June, writes Vox.

Inflation is finally slowing down. Will things get cheaper? (Vox)

Excerpt from Vox: The slowdown last month — driven largely by falling fuel prices — is a significant step in the right direction. But the United States is still a long way from the Federal Reserve’s goal of 2 percent annual inflation over time, and the bad news is that high prices for many goods and services are likely here to stay for a while. The Fed is taking aggressive steps to get inflation under control, but that doesn’t mean that prices overall are going to rapidly decline or return to pre-pandemic levels. It just means that prices as a whole will level off and increase more slowly, rather than continuing to skyrocket. That’s how the Fed’s policy works. The central bank isn’t trying to bring prices down but rather rein in the rate of increase so they rise at a slower and more stable rate.
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In a related story according to The Washington Post, the Inflation Reduction Act that Democrats muscled through the Senate on Sunday, and is close to passing the House, would represent one of the most consequential pieces of economic policy in recent U.S. history.

How the Inflation Reduction Act might impact you — and change the U.S. (The Washington Post)

Excerpt from The Washington Post: The nonpartisan Committee for a Responsible Federal Budget estimates that the bill would put about $385 billion into combating climate change and bolstering U.S. energy production through changes that would encourage nearly the whole economy to cut carbon emissions. The bill uses two main levers: major new incentives for private industry to produce far more renewable energy, and other incentives for households to transform their energy use and consumption. Democrats say this second set of incentives will also offer immediate consumer relief for the higher energy prices that have bedeviled the Biden administration. The bill would also raise hundreds of billions in new revenue through new tax provisions — the biggest of which will fall on the country’s large corporations.
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