U.S. Inflation Slows to 2.4%, Boosting Hopes for Interest Rate Cuts

Author: Hajira Uzma

Editors: Jigyasa Prabhakar, Emily Argueta

The latest inflation report was just released for the United States and it has peak interest throughout the nation. Inflation occurs when the price of goods and services in high concentration consumer industries increase over time. This report determines if prices are quickly rising or holding steady which affects families, businesses, and governmental policy throughout the United States. The data even affects the Federal Reserve, which makes decisions that impact the whole economy.

According to the report, the Consumer Price Index, or CPI, which measures inflation, rose by 0.1% from May to June. Over the past year prices have gone up by 2.4%. This is a big improvement compared to the high inflation rates seen in 2022 and 2023. The “core” CPI, which excludes food and energy since they change often, rose by just 0.1% in June and is up 2.8% over the year. Food prices increased by 2.9%, however, energy prices dropped by 3.5% in the last 12 months.

The slowdown in inflation gives confidence to the stock market by helping investors believe that the economy is under control. After this report came out, stock prices went up. This is because investors believe that the Federal Reserve will not keep raising interest rates if inflation stays low. If inflation continues to cool down, the Federal Reserve could even lower rates in the future to support the economy.

This report is a positive sign for the economy as it shows that inflation isn't rising as fast as before. It also may allow the Federal Reserve to stop increasing interest rates, which means our money has higher spending power. If this trend continues, it could lead to a stronger economy and lower costs for families across the country.