(Washington) Prices continued to rise in July in the United States compared to a year ago, but have shown another sign of moderation since June, as household incomes rose unexpectedly.
Inflation was 4.2% in one year in July, compared to 4% in June, and 0.4% in one month, as expected, versus 0.5% in June, according to the personal consumption expenditures index released Friday by the Commerce Department.
Sure, prices continue to rise compared to last year, but this new month-long slowdown is in line with the hypothesis defended by many economists, who believe that this high inflation is due to temporary pressures, which will therefore not lead to continued high prices.
During the second quarter as a whole, the one-year inflation rate was at its fastest pace since 1982, at 6.5%. Excluding volatile food and energy prices, so-called core inflation was at its highest level since 1975, at 6.1%.
Personal consumption expenditures inflation is the inflation used by the US central bank, and its chair, Jerome Powell, is scheduled to give a highly anticipated speech on Friday. Another measure, CPI inflation, slowed in July over one month (+0.5%) and remained stable over one year (+5.4%).
Americans also saw their income rise 1.1%, much more than the 0.2% analysts had expected.
The Commerce Department said the increase was due to checks the federal government had sent since the beginning of the summer to a large portion of families with children. This made it possible to offset the decline in additional unemployment benefits paid since the beginning of the pandemic, which half of the states decided to reduce or eliminate early this summer, in advance.
Spending rose 0.3%, slightly less than expected, as service activities were popular, while purchases of goods declined.
Consumer spending is the driver of the American economy.
In June, the reopening of services thanks to vaccination, especially restaurants and tourism-related activities, led to a rebound in household spending, which rose by 1%. On the other hand, their income was almost stable compared to May (+0.1%).
And while the US economy returned to its pre-crisis level in the second quarter, the delta variable had already begun to slow the recovery over the summer. Events such as concerts or conferences have been canceled, and people are becoming less confident about certain activities.
Especially since some employers struggle to find employees, especially for lower paying jobs, and therefore have to reduce their working hours.
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