FX.co ★ US inflation hits 2-year low

The world's largest economy has proved prophets of gloom and doom wrong once again. It remains resilient despite pessimistic forecasts. By efficiently using all the available tools, the Fed was able to tame inflation despite difficult economic conditions. Consumer prices have finally approached 3%.

The Fed has been severely criticized for aggressive tightening. However, it has brought outstanding results. The US inflation rate dropped to 3% in June, marking a two-year low. The last time such an indicator was seen was in March 2021. Compared to June, inflation decreased by 1%. Positive shifts occurred mostly because of monetary policy tightening. The Fed has raised rates to 5.00-5.25%.

There was a slight increase in the Consumer Price Index by 0.2% compared to May. The index measures changes in the prices of goods and services from a consumer's perspective. The core CPI, excluding food and energy, slowed down by 0.5%, to 4.8% in June from 5.3% in May.

Despite a gradual decline, annual inflation is still significantly higher than the 2% target. Yet, at the end of June, it climbed by only 1%. There is a great chance it may lower even more in the nearest future. Earlier, Janet Yellen warned about the risk of a recession due to unacceptability high inflation.