PRICE RELIEF
The inflation rate slowed in July to 8.5 per cent, but policymakers have made it clear in recent comments that they are not done with their efforts to cool the economy.
Still, Bostjancic said the Fed might dial back the pace of increases.
“With inflation, commodity prices, and inflation expectations easing, the Fed might decide to scale back the rate hike to 50bps (basis points),” she said in an analysis.
The Fed’s next policy meeting is in late September.
US gas prices at the pump soared in the wake of the Russian invasion of Ukraine in late February, but in recent weeks have been trending down and have fallen by more than US$1 a gallon after hitting an all-time high over US$5 in mid-June, squeezing family budgets.
While spending on automobiles fell 1.7 per cent and gasoline stations dropped 1.8 per cent, Americans ramped up spending on furniture, food, electronics and at online stores.
Sales of building materials and garden supplies jumped 1.5 per cent, but at clothing and department stores they fell.
The data are seasonally adjusted but do not take into account changes in prices, so as costs rise a shopping dollar does not stretch as far.
Still, the report shows the stockpile of savings is helping consumers deal with the higher prices, and bodes well for economic growth, said Ian Shepherdson of Pantheon Macroeconomics.
“The big picture here is favourable,” he said. “If you’re looking for recession, you won’t find it here.”
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