US inflation fell sharply to 3 per cent in June, sending the dollar lower and highlighting the Federal Reserve’s relative success at bearing down on price pressures. The improved picture in Wednesday’s data stands in sharp contrast to other advanced economies, such as the UK, where the Bank of England is struggling to control inflation of 8.7 per cent
The major US stock indices closed at 15-month highs; the two-year Treasury yield, which moves with interest rate expectations, fell to a two-week low of 4.72 per cent; and the US dollar index, which measures the greenback against a basket of six currencies, hit its weakest point in 15 months.
The annual increase in the consumer price index slowed from 4 per cent in May to 3 per cent in June, the slowest rate of inflation since March 2021, compared with expectations of 3.1 per cent. “After a punishing stretch of high inflation that eroded consumers’ purchasing power, the fever is breaking,” said Bill Adams, chief economist at Comerica Bank.
The headline rate of inflation has been moving closer to the Fed’s 2 per cent target after peaking at more than 9 per cent last year. However, core inflation — which strips out volatile food and energy costs — has proved more sticky, raising expectations that the US central bank will need to lift interest rates further. Core CPI fell more modestly, from 5.3 per cent to 4.8 per cent in the June data.
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Source: www.ft.com
ENB
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