Title: U.S. consumer price growth expected to slow due to lower gasoline costs

Aug 10, 2022 01:21AM ET

By: AnalysisWatch

U.S. consumer prices are expected to have risen at a much slower pace in July, thanks to a sharp drop in the cost of gasoline, giving the first notable sign of relief to Americans who have seen inflation rise over the past two years.

Reuters polled economists ahead of the Labor Department's expected report on Wednesday.

This would be the largest monthly slowdown in price increases since 2005, following a roughly 20% drop in gasoline prices.

Prices at the pump surged in the first half of this year because of the war in Ukraine, reaching a record average of more than $5 a gallon in mid-June, according to motorist advocacy group AAA.

However, the report is likely to show that underlying inflationary pressures remain elevated as the Federal Reserve considers whether to adopt another oversized interest rate hike in September.

The Fed has indicated that several monthly declines in CPI growth would be needed before it would abandon the aggressive monetary policy tightening implemented to tame inflation, currently at four-decade highs.

U.S. consumer prices have surged due to a number of factors, including stalled global supply chains, massive government stimulus at the start of the COVID-19 pandemic, and Russia's invasion of Ukraine.