Washington, September 11 (FinanceFlashNews.com) – U.S. inflation slowed down in August to 2.5% year-over-year, the lowest rate in 3.5 years, according to the U.S. Department of Labor. This marks the fifth consecutive month of slowing inflation. However, core inflation remained stable, which may influence the Federal Reserve decision on interest rates next week.
Energy Prices Decline
After five months of rising energy prices, August saw a 4% drop, the sharpest decline since January. Overall, consumer prices increased by 0.2% from July, maintaining the same growth as in the previous month.
Core Inflation Stays Steady
Core inflation, which excludes volatile food and energy prices, rose by 3.2% year-over-year in August. This matched July’s growth rate. On a monthly basis, core inflation edged up by 0.3%, slightly higher than the 0.2% forecast by analysts.
Fed’s Interest Rate Decision
Despite inflation slowing, it remains above the Federal Reserve’s target of 2%. This slowdown might allow the Fed to focus more on the job market, where unemployment dropped to 4.2% in August from 4.3% in July. This reduces the chances of a large interest rate cut of 50 basis points.
The Fed has held its interest rates between 5.25% and 5.50% since last year, after raising them by 525 basis points in 2022 and 2023 to curb inflation, which peaked at 9.1% in June 2022.
Key Inflation Data for August 2024
| Metric | Value |
|---|---|
| Overall Inflation | 2.5% |
| Core Inflation (YoY) | 3.2% |
| Monthly Price Increase | 0.2% |
| Core Inflation (MoM) | 0.3% |
| Energy Price Drop (YoY) | 4% |
Keywords: U.S. inflation, core inflation, Federal Reserve, energy prices, interest rates, unemployment
