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Year-over-year inflation rates reached the lowest level seen in more than three years. This decline signals to consumers the potential that the post-Covid price spike is fading, and the Federal Reserve could be setting up to cut interest rates in September.
In a report from the Labor Department, data shows that consumer prices measured year to year rose 2.9% in July, down from 3% in June. This marks the lowest gain since March 2021, according to an article from AP News. The report from the Labor Department stated that nearly all of the inflation seen in July was from higher rental prices and other increased housing costs. The Department also declared that this trend is easing as well.
As inflation falls closer to the Federal Reserve’s target rate of 2%, economists are feeling more confident in the direction the rate is moving as well as with the pace at which the rate is moving. If the rate was declining too quickly, it may suggest a weakening economy. In the same AP News article, Tara Sinclair, an economist from George Washington University and former Treasury Department official, shared a favorable view on the Labor Department’s report.
“It’s a comforting report, both because it is going in the right direction and because it is not doing anything too dramatic,” Sinclair said. “It is exactly what we wanted to see.”
Fed Chair Jerome Powell stated that he is seeking further evidence of slowing inflation before the Fed will officially begin cutting rates, but economists are anticipating the first cuts to begin around mid-September, with further cuts to follow in November and December.
While the future looks brighter based on this recent data, consumers are still feeling the aftereffects of inflation and the increased cost of living over the last few years. Prices for daily costs are on average still about 20% higher than what they were three years ago, and consumers are becoming more price-sensitive.
Increased costs of living may mean increased debt burdens for consumers. If you are feeling overwhelmed by higher debt and are not sure what your next steps should be, bankruptcy may be it. The attorneys at Sader Law Firm are available to answer all questions and figure out your best course of action. Contact Sader Law Firm at (816) 561-1818 for a free phone consultation and learn more about how bankruptcy might be the right move for you.
