US consumer inflation moderates in July

Washington: Consumer inflation or Consumer Price Index in the US has moderated to 8.5 per cent in July compared to a year ago period, US Bureau of Labor Statistics data showed. The inflation print for the month was down from a four-decade high of 9.1 per cent in June.

The Consumer Price Index (CPI) measures the change in prices paid by consumers for goods and services. The gasoline index fell 7.7 per cent in July and offset increases in the food and shelter indexes, resulting in the all items index being unchanged over the month.

The energy index fell 4.6 per cent over the month as the indexes for gasoline and natural gas declined.

The US economy has been going through a rough patch with high inflation and negative growth.

In the backdrop of an over four-decade high inflation in the country, the US Federal Open Market Committee had in its latest meeting raised the key policy interest rate by 75 basis points to 2.25-2.50 per cent, anticipating that the increase in the interest rates will be "appropriate".

Hiking interest rates typically cool demand in the economy, thereby putting a brake on the inflation rate.

The US Federal Reserve in its June meeting too raised the interest rate by 75 basis points, which was the steepest hike since 1994.

Real gross domestic product (GDP) in the US decreased at an annual rate of 0.9 per cent in the second quarter of 2022 (April-June), marking the second consecutive quarter of degrowth which qualifies for a technical recession. In the January-March quarter, real GDP decreased 1.6 per cent.

A technical recession is often defined in which there have been two consecutive quarters of negative growth in the real GDP.