US inflation eases in July as petrol prices drop

August 11, 2022 8:20 am

[Source: BBC News]

Prices in the US continued to rise rapidly last month, but a fall in petrol costs helped to ease the pace.

The annual inflation rate, the pace at which prices rise, was 8.5% in July, down from June when it surged to 9.1%, the Labor Department said.

Aside from energy, costs for many items, including groceries and housing, continued to climb.

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The higher costs have left many families struggling and had a significant impact on the economy.

Jobs growth remains strong, but other indicators, like consumer and business sentiment, have been hit by worries about rising prices, which are climbing faster than they have since the early 1980s.

Over the last 12 months, prices for groceries in the US have jumped 13.1%, the largest annual increase since 1979. Rising coffee prices helped push those costs higher in July, surging 3.5% just since June.

Prices for housing, medical care and recreation were also up from June, but the gains were offset by declines for items such as used cars, airfares and clothing.

Petrol prices fell by 7.7% compared with June, when prices at the pump had hit a record high of more than $5 per gallon on average.

Overall the report was better than many analysts had expected.

“This is not yet the meaningful decline in inflation [the US central bank] is looking for. But it’s a start and we expect to see broader signs of easing price pressures over the next few months,” said Paul Ashworth, chief US economist at Capital Economics.

Prices in the US have been rising rapidly since last year, driven higher by a mix of forces, including strong demand from consumers, whose spending was supported by Covid-19 cheques from the government.

At the same time, pandemic-related shutdowns in China, the war in Ukraine and other issues have strained supplies of goods, including necessities such as oil and wheat.