Inflation in the United States cooled further in August compared to a month earlier. This was mainly because Americans spent less money on gasoline last month.
According to the US government, inflation was 8.3 percent year-on-year last month, compared to 8.5 percent in July. Inflation thus seems to have peaked in June at 9.1 percent. That was the highest level in more than 40 years.
The rise in consumer prices was higher than expected. Economists had generally expected inflation in the world’s largest economy to be 8.1 percent annually. Instead, consumer prices rose by 0.1 percent compared to July, while a decline of 0.1 percent was expected.
Excluding the strongly fluctuating energy prices, inflation rose by 0.6 percent monthly. On an annual basis, this so-called core inflation amounted to 6.3 percent, compared to 5.9 percent in July. This figure was also higher than the 6.1 percent that economists had forecast.
The inflation rate is of great importance to the US central bank, which is raising interest rates to combat high inflation. The Federal Reserve has raised interest rates several times this year. In the past two interest rate decisions, interest rates were raised by strong steps of 0.75 percentage points. However, with inflation cooling, the Fed may need to raise interest rates somewhat less in the future.
The U.S. Federal Reserve will meet again next week to discuss interest rates. At that meeting, interest rates appeared to be raised again by 0.75 percentage points. Central Bank President Jerome Powell said in August that the Fed would continue to take strong action to bring inflation back to its target of 2 percent.
According to Powell, the economy will suffer from these interventions for a longer period of time. Still, if they fail to contain the price increases, the consequences will be much more damaging.