USA: inflation falls more than expected. Recession looming?
A decline in inflation in the US was expected, due to internal and external factors, but the fall was higher than expected and this points to a very sharp economic slowdown.
The annual inflation rate in the US slowed to 3% in June 2023, the lowest since March 2021, from 4% in May and expectations of 3.1%. For more information, here is the press release from the Statistics Office.
The slowdown was partly due to last year's high base effect, when soaring energy and food prices pushed the global inflation rate to 1981 highs (9.1%).
The cost of energy collapsed by 16.7% (against -11.7% in May), with a drop of 36.6% for fuel oil, 26.5% for petrol and 18. 6% for gas services. Electricity prices increased by 5.4%. Inflation also slowed for food (5.7% compared to 6.7% in May) and housing (7.8% compared to 8%). Smaller increases were also recorded for new vehicles (4.1% vs 4.7%), clothing (3.1% vs 35%) and transport services (8.2% vs 10.2%) .
The cost of medical services fell 0.8% and the prices of used cars and trucks fell 5.2%. Here is the graphic relaitov
The annual rate of core consumer price inflation in the United States, which excludes volatile items such as food and energy, i.e. the "Core" rate, fell to 4.8% in June 2023, the lowest since October 2021, from 5.3% from the previous month and below market expectations by 5%.
What is worrying is the sharp slowdown in the services sector: while the reduction in energy prices was almost obvious, given that oil has not seen flare-ups and the price of gas has remained rather low, indeed declining given the summer month. But you have to worry if you see a drop in the price of medical services. It means that people are in such financial straits as to reduce spending on health and therefore also lead to a reduction in prices.
Something has broken in the consumption of American citizens. Yet the FED seems willing to continue with the restrictive policy…
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The USA article: inflation falls more than expected. Recession looming? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/usa-linflazione-cade-piu-delle-attese-recessione-alle-porte/ on Wed, 12 Jul 2023 13:56:13 +0000.