US inflation reaches a 3-year low as Federal Reserve prepares to cut interest rates
The post-pandemic spike in U.S. inflation eased further last month as year-over-year price increases reached a three-year low, clearing the way for the Federal Reserve to cut interest rates next week
WASHINGTON — The post-pandemic spike in U.S. inflation eased further last month as year-over-year price increases reached a three-year low, clearing the way for the Federal Reserve to cut interest rates next week.
Wednesday’s report from the Labor Department showed that consumer prices rose 2.5% in August from a year earlier, down from 2.9% in July. It was the fifth straight annual drop and the smallest such increase since February 2021. From July to August, prices rose just 0.2%.
Excluding volatile food and energy costs, so-called core prices rose 3.2% in August from a year ago, the same as in July. On a month-to-month basis, core prices rose 0.3% last month, a slight pickup from July's 0.2% increase. Economists closely watch core prices, which typically provide a better read of future inflation trends.
For months, cooling inflation has provided gradual relief to America’s consumers, who were stung by the price surges that erupted three years ago, particularly for food, gas, rent and other necessities. Inflation peaked in mid-2022 at 9.1%, the highest rate in four decades.
A key reason for last month's drop in overall inflation was the third decline in gas prices in the past four months: Average gas prices fell 0.6% from July to August and are down 10.6% from a year ago. Used cars fell 1% last month. Measured from a year earlier, used car prices have tumbled 10.4%.
Grocery prices were unchanged from July to August, extending a cooling in food costs even though they remain much higher than they were three years ago. Over
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