US inflation rate rises to 3.2 percent

US inflation rate rises to 3.2 percent

Inflation is on the rise again in the US. Consumer prices rose 3.2 percent in July after 3.0 percent in June, the Labor Department said today in Washington. At the same time, core inflation fell from 4.8 to 4.7 percent. This rate excludes volatile energy and food prices. The indicator allows conclusions to be drawn about the basic inflation trends and is therefore very important for the Fed.

However, experts advise against attaching too much importance to the increase: “The result is no more than a small setback, the path of inflation is pointing further down. The outlook for core inflation remains difficult,” says Bastian Hepperle from Hauck Aufhäuser Lampe Privatbank. This is also confirmed by Ulrich Wortberg from Helaba: “This should not be overinterpreted after the overall rate of inflation had fallen significantly in the previous month thanks to a base effect.”

Another rate hike in September?

A further interest rate hike by the US Federal Reserve is not off the table from the experts’ point of view: “By the time of the Fed’s September meeting, inflationary pressure will not have decreased far enough to be able to announce the end of the interest rate hikes up in the air,” said Hepperle.

The Fed wants to curb inflation and make it dependent on the available data whether or not to raise interest rates again in September. Currently, the interest rate margin in the US is already 5.25 to 5.50 percent. Different signals came from the group of monetary watchdogs as to how to proceed: According to Director Michelle Bowman, further interest rate hikes are likely to be necessary to tame inflation. The head of the Atlanta Fed district, Raphael Bostic, recently saw no need for increases.

initial applications unemployment benefit increase significantly

In particular, the data published today on the number of initial applications for unemployment benefits could be an important argument for opponents of further interest rate hikes: In the past week, the number of applications for help increased by 21,000 to 248,000, as the Ministry of Labor announced today.

Although the number of initial jobless claims rose for the second week in a row, it remains at a comparatively low level. However, the rise in interest rates in the USA is also showing the first signs of a slowdown in the robust labor market. The initial applications are considered a timely indicator of the labor market in the world’s largest economy. A robust labor market means higher wages, which can fuel inflation.

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