Moderate U.S. Consumer Price Increase Sparks Fed Rate Cut Speculation

U.S. consumer prices rose slightly in July, leading to a slower annual inflation growth below 3% for the first time in over three years. This trend is likely to influence the Federal Reserve to cut interest rates next month. However, rising rents and other economic factors complicate the situation.

U.S. consumer prices rose slightly in July, marking a significant slowdown in annual inflation growth to below 3% for the first time in more than three years. This trend opens the door wider for the Federal Reserve to consider cutting interest rates next month.

The Labor Department report on Wednesday marked the third consecutive month of moderate consumer price increases, suggesting inflation is on a downward trajectory. Businesses reported that consumers are increasingly resisting high prices by bargain hunting and switching to cheaper alternatives.

Despite these signs, rising rents and inflation rates above the Federal Reserve's 2% target temper expectations for a large rate cut. Economists note that while the Fed is likely to cut rates, a significant reduction seems unlikely unless labor market conditions worsen.

(With inputs from agencies.)