US Inflation: Not out of the woods yet
Isaac Stell, investment manager at Wealth Club, commented: “US inflation declined again in July as a continued fall in energy costs helped ease inflationary pressures.
Once again, the biggest contributor to the fall in inflation came from the energy index, which fell 1.5% month-on-month. Shelter, on the other hand, rose 0.1% and accounted for roughly two-thirds of the monthly increase. July’s figures point to a continued easing in price pressures, although energy markets remained volatile during the month with Brent Crude briefly hitting $100 a barrel amid ongoing Middle East tensions.
The renewed standoff between the US and Iran is casting fresh doubt on the prospects of a near-term deal to reopen the Strait of Hormuz, one of the world’s most important energy trade routes. With neither side showing signs of backing down, oil prices remain under upward pressure. Brent crude has continued to climb throughout August, with prices hovering above $89 a barrel. The longer this stalemate persists, the greater the risk that higher energy costs reignite inflationary pressures, not just in the US but globally. Today’s data is welcome news, but the US is not out of the woods yet.”