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Pedestrians pass the Macy’s store in the Downtown Crossing shopping district, Wednesday, July 14, 2021, in Boston. (AP photo / Charles Krupa)

WASHINGTON (AP) – US consumer prices rose last month, but at the slowest rate since February, a sign that Americans are getting some relief after four months of steep price hikes that have put a strain on the country’s households could experience.

The Labor Department report on Wednesday showed consumer prices rose 0.5% from June to July, up from the previous monthly increase of 0.9%. Compared to the previous year, however, they have increased by a remarkable 5.4%.

Excluding the volatile energy and food prices, so-called core inflation rose 4.3% last year, down slightly from 4.5% in June – faster than it has been since 1991.

Americans continue to face higher costs, with year-on-year inflation matching the June increase, the largest annual increase since 2008. At the same time, some of the most recent drivers of the rise in inflation have slowed over the past month. The price of used cars, which had soared over the past three months, rose by just 0.2% in July. Airfares, which had soared, even fell 0.1% in July.

“We believe June marked the peak of annual inflation,” said Kathy Bostjancic, an economist at Oxford Economics.

“However, price increases due to the reopening of the economy and ongoing bottlenecks in the supply chain will keep the inflation rate high.”

Rising inflation has proven to be the Achilles’ heel of the economic recovery, depriving workers of much of the benefits of higher wages and increasing pressure on Federal Reserve policy-makers, chaired by Jerome Powell, who face a mandate to maintain stable prices maintain.

Inflation also threatens to become a political drag on President Joe Biden, who was accused by Republicans in Congress of accelerating inflation after pushing through a $ 1.9 trillion financial aid package last spring , which included business cycle controls for most households and additional federal unemployment benefits. More trillions in spending, backed by Biden and the Democrats in Congress, will be considered by Congress in the coming weeks.

In response, Powell and the White House have stated that they believe the spike in inflation, which significantly beats the Fed’s annual target of 2%, will prove temporary as it is mainly due to supply bottlenecks from the sudden shutdown – and the quick reopening – from a $ 20 trillion economy.

Still, the Biden government tried on Wednesday to contain oil and gas prices, which had also risen last year, by calling on OPEC states to boost oil production to support the global economy.

The July inflation report indicated that while price hikes are easing, they are not yet going back as far as the White House and Fed are hoping. Car rental costs, for example, skyrocketed nearly 75% in the past year after rental companies sold much of their fleets to raise cash during the pandemic. However, last month rental car prices fell nearly 5%, a sign that the price hike may be reversed. Auto insurance prices also fell in July after rising for six straight months.

Some categories are still registering price increases, but these are likely to weaken in the coming months. For example, hotel room costs rose 6% in July and are up almost 22% year over year. Accommodation companies struggled to hire enough workers to keep up with a surge in travel as the pandemic subsided this spring. But the rise is unlikely to continue like this.

In other categories, recent cost increases may not go down anytime soon. Restaurant prices rose 0.8% in July, the largest increase since 1981, a sign that higher wages and rising food costs are being passed on to consumers.

New car prices, which rose 1.7% in July, rose 6.4% last year, the largest year-on-year increase since 1982. Semiconductor shortages have constrained auto manufacturers and there are little signs of it a slowdown yet. Nissan said yesterday that it is closing a huge Tennessee factory for two weeks due to the chip shortage.

And rents are rising as many potential homebuyers are forced to stay in apartments because house prices have soared over the past year and they are unaffordable for many. A rental knife, which makes up a quarter of the overall consumer price index, rose 0.3% last month and could continue to rise in the months ahead.

A standing chorus of Fed officials has suggested that the Fed’s goal of making progress toward a modest 2% annual inflation rate has been achieved and that the central bank should begin its monthly bond purchases of US $ 120 billion. Reduce dollars. The buying, which began in March 2020 when the pandemic paralyzed the economy, should keep long-term lending rates low to stimulate borrowing and spending.

Eric Rosengren, president of the Federal Reserve Bank of Boston, said in an interview with The Associated Press Monday that, excluding the price spikes caused by supply constraints and the reopening of the economy, underlying inflation sustained above 2%, the Fed’s target , lies.

However, several other Fed officials, including Powell himself and Governor Lael Brainard, have said they want to see more data before committing to pulling back on Fed stimulus measures.

Some companies are still raising prices to offset the higher costs of parts and labor. The burger chain Shake Shack plans to hike its prices by 3% to 3.5% in the last three months of the year, executives said in a conference call.

Unilever, the maker of Dove soap and Ben and Jerry’s ice cream, has announced that it will raise some prices to offset higher raw material costs. And Yum Brands, which owns KFC and Taco Bell, said late last month that its franchisees had made “moderate” price increases.

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