New Delhi
All eyes are on the US Federal Reserve as it tracks economic data to decide on rate cuts. Now, a measure of prices tracked closely by the Fed suggests that inflation pressures in the economy are easing.
Data showed a flat growth of consumer prices for the month of in the last 2 months. This marks the mildest such performance in more than four years. Core inflation also registered slight improvements on the previous month's data.
While home sales & factory activity remain a concern, a decline in consumer prices is welcome news for Fed policymakers, who have maintained interest rates in the 5.25-5.50 per cent range. Fed has been tracking inflation and expects it to fall within its target range before it starts cutting interest rates. Economists now anticipate rate-cut bets to start in September.
Fed has raised its benchmark rate 11 times in 2022 & 2023 amid the worst streak of inflation in four decades. Still, average prices remain far above where they were before the pandemic. This is a major cause of concern for consumers and a potential issue in the upcoming elections.
Fed's preferred inflation gauge is the personal consumption expenditures price index, which tracks changes in how people shop when inflation jumps. For example, it can track when consumers switch from luxury goods to cheaper goods.
Despite easing prices, the overall economy continues to lag. The US economy expanded at a 1.4 per cent annual pace from January through March, the slowest growth since 2022. Consumer spending is also relatively stagnant.