Thu Sep 12 07:06:59 UTC 2024: ## Inflation Eases in August, Paving Way for Fed Rate Cuts

**WASHINGTON** – Inflation in the US continued its downward trend in August, reaching a three-year low, according to the Labor Department. The consumer price index rose 2.5% year-over-year, marking the fifth consecutive annual decline. This encouraging news has led economists to predict a rate cut by the Federal Reserve next week.

Excluding volatile food and energy costs, core inflation remained steady at 3.2% year-over-year. The modest month-to-month increase in core prices, from 0.2% to 0.3%, suggests that inflation is steadily cooling, giving the Fed more leeway to focus on supporting the job market.

The Fed, anticipating a return to its 2% inflation target, is poised to begin cutting its key interest rate after reaching a 23-year high. A quarter-point reduction is widely expected next week, which could lead to lower borrowing costs for mortgages, auto loans, and credit cards.

A key factor in the easing of inflation was the drop in gas prices, which fell by about 10 cents per gallon last month. Economists also predict that government measures of grocery prices and rents will rise more slowly in the coming months.

While food prices are still about 20% higher than pre-pandemic levels, they have stabilized over the past year. The cost of new apartment leases has also begun to cool due to increased construction.

The latest inflation figures could influence the ongoing presidential race. Former President Donald Trump has blamed Vice President Kamala Harris for the inflation spike, while Harris has proposed subsidies and a federal ban on price gouging to address the issue.

Read More