US inflation lowest in 2 years

Just released data shows that core US inflation in June was 4.8% - the lowest since late 2021.

The US Bureau of Labor Statistics has just announced that the country's Consumer Price Index (CPI) in June increased by 3% compared to the same period last year. This rate has slowed for the 12th consecutive month. Last June, US inflation reached 9.1% - the highest since 1981.

Core inflation, which excludes volatile food and fuel prices, rose 4.8%, the slowest since late 2021. Still, the pace is above the Fed's 2% target.

Inflation (black line) and core inflation in the US from 2019 to 2023. Chart: Bloomberg

Housing costs accounted for 70% of the increase in June, but they rose just 0.2% from the previous month. An index tracking rents also posted its smallest increase since 2021. Many economists expect home prices to continue to cool in the coming months.

Energy prices, however, rose, driven largely by gasoline and electricity. Meanwhile, used-car prices fell for the first time in three months.

After the inflation data was released, the world spot gold price increased by 15 USD per ounce on the evening of July 12. Currently, each ounce is trading around 1,947 USD. Gold is considered a traditional tool in inflation prevention.

US stock futures also rose. In contrast, US government bond yields and the dollar fell. Investors also reduced bets on the possibility of the Fed raising interest rates this month, to below 50%.

The US Federal Reserve (Fed) has raised interest rates 10 times in a row since March 2022 to curb inflation. The agency paused last month and is expected to raise rates again at its meeting later this month.

Ha Thu (according to Bloomberg, CNN)

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