US inflation is falling, good news for markets

Inflation in the US fell to 8,5 percent. in July from 9,1 percent. in June. As in Poland, the falling ones are responsible for its reduction gasoline prices. Probably FED at the September meeting it will have to focus on ambiguous data from the US economy.

Inflation in the USA

US inflation in July was 8,5 percent. y / y, which means a drop against the record reading from June, when it reached 9,1%. Inflation overseas is slowing down mainly due to falling gasoline prices. Over the last 12 months, its price has increased by 44 percent, while a month ago this increase was 60 percent. Gasoline is getting cheaper as the price of crude oil is now falling at around $ 95 a barrel. Monthly inflation fell even more from 1,3%. to zero. No changes - 5,9 percent on the other hand, is core inflation, i.e. inflation net of the most volatile prices, incl. food and energy.

Falling inflation is good news for financial markets as it heralds the near end of the cycle of rate hikes. Falling inflation, was expected by analysts and had its share in the current 13 percent. rally on S & P500. June inflation - 9,1 percent this is probably its peak in the US, although a lot still depends on the prices of oil and energy commodities in the near future.

Will the rate hikes end this year?

Therefore, there remains an open question about the decisions of the FED in the coming months in a situation when data from the economy are ambiguous. On the one hand, inflation is falling, but on the other hand, the labor market data is shockingly good. Despite the fact that the US economy entered a phase of technical recession in the last quarter. The most likely scenario is that the Fed will complete the rate hike by the end of the year.

Also in Poland, inflation in July did not increase and remained at the June level of 15,6 percent. And also in Poland, it is the decline in fuel prices that is responsible for such a situation, while other prices, e.g. of food, continued to rise.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.