Inflation continues and will slow below expectations in August in the United States – 09/14/2022 at 00:19

Joe Biden at the White House, during a speech on his investment plan, the Inflation Reduction Act, September 13, 2022 (AFP / Mandel NGAN)

Inflation slowed slightly in August in the United States, driven by lower fuel prices, while rents or food continued to rise, a thorn in Joe Biden’s side in the two-month midterm elections.

Consumer prices rose 8.3% annually in August, up from 8.5% in July, according to the CPI index released Tuesday by the Labor Department. However, this slowdown disappointed analysts, who saw inflation falling even lower, to 8%.

Tuesday afternoon, while Wall Street ended its session in the red because of these numbers, Joe Biden gathered at the White House hundreds of people to celebrate a newly adopted text, and called ” Act on the reduction of inflation” or “Inflation Reduction Act “.

Evolution of inflation in the United States since 1948 (AFP / )

Evolution of inflation in the United States since 1948 (AFP / )

The 79-year-old Democrat, wearing a shirt and sunglasses on his nose, exclaimed: “With this law, the American people won, and the lobbies lost!”

The “Inflation Reduction Act”, named to stay in the news but actually a program of environmental and social reforms, “will make a big difference for families of the middle and working classes”, he assured.

Joe Biden also insisted, a few weeks before the legislative elections in November, the fact that no parliamentarian of the Republican opposition supports this text that promises, for example, to lower the very expensive amount of some common medications, such as insulin.

– “Stubborn” inflation –

“Inflation continues to be stubborn,” Kathy Bostjancic, chief economist at Oxford Economics, commented in a note.

Since more than a month, prices have started again, at + 0.1% compared to July, while a slight decrease is expected and inflation has become zero between June and July.


An advertisement “Beat Inflation” for 99 Cents Only Stores, in the subway of Los Angeles (California) at the station of Redondo Beach (California) on August 31, 2022 (AFP / Patrick T. FALLON)

Service station filling is definitely lower than in July (-10.1%). A welcome respite in a country where the car has always been as important as size, and when fuel prices have soared since the start of the war in Ukraine.

Prices also fell for airline tickets and used cars.

But that wasn’t enough to offset the rise in most other products. Housing, food, medical care, new cars … The increase is “generalized”, detailed the Department of Labor in its press release.

The price of natural gas and electricity also continued to rise.

“Ouch. Much larger than expected (price) increases across a wide range of categories,” said Ian Shepherdson, economist for Pantheon Macroeconomics, in a note.

The so-called underlying inflation, calculated for all prices except those of food and energy, therefore accelerated, to +6.3% for a year (against +5.9% in July), and + 0.6% for a month ( against +0.3% in July ).

For a year and a half, prices have been rising in the United States, undermining household purchasing power. Inflation reached its highest level in more than 40 years in June, before easing in July.

– “Hurry up” –

These numbers caused the dollar, “safe haven”, to jump against other major currencies on Tuesday, because they had to convince the central bank of America (Fed), in the maneuver to fight against inflation, which continues to tighten its grip in a fist. .Monetary Policy.

In concrete terms, its key rates have been gradually raised, pushing banks to raise interest rates on loans offered to individuals and businesses. Then they are less inclined to consume and invest, allowing the pressure on prices to ease.

The governor can, on September 21, at the end of his next meeting, to raise them by three quarters of a percentage point, as in June and July. It has not previously resorted to such an increase since 1994.

“Time is running out,” its president, Jerome Powell, warned Thursday.

This deliberate slowdown in economic activity, however, has the risks of leading to a recession, and should, in any case, push unemployment, which has increased slightly in August, to 3.7%.

The job market, however, remains in excellent health and faces a labor shortage, giving the Fed little respite.

The CPI index is used to index pensions. The Fed, whose goal is to return inflation to 2%, favored another measure, the PCE index, whose growth slowed in July (+ 6.3% for a year).

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