Arya News - Energy prices declined 1.5 percent in July but remain 14.7 percent higher compared with a year ago.
United States consumer inflation has slowed in July amid a short retreat in energy prices and hopes that the Strait of Hormuz would reopen.
Shipping continues to be severely disrupted since Iran established a maritime “toll booth” in the strait shortly after the US and Israel launched a war against the country in late February.
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Inflation has been largely driven by fuel prices, which, despite a temporary reprieve, are rising. While energy prices declined 1.5 percent from this time last month, they are up 14.7 percent for the year.
“Energy prices have gone down in July because people thought perhaps the blockage of the Strait of Hormuz would end, but it didn’t. If you look at the past 12 months, energy prices are now much higher than they were a year ago,” Michael Klein, professor of international economic affairs at The Fletcher School at Tufts University, told Al Jazeera.
Brent crude fell 7 percent last week but has jumped this week as hopes that the Strait of Hormuz would reopen faded. Brent crude oil futures rose 0.3 percent to $89.19 per barrel on Wednesday.
Petrol prices dropped 2.9 percent from last month but surged 39.1 percent from a year ago.
At the petrol pump, prices are rising after tumbling 9 cents last week.
The average price for a gallon (3.78 litres) of petrol is $4.03, according to the American Automobile Association (AAA), which tracks daily petrol prices. By comparison, it was $4.00 on Monday, $4.08 this time last week, $3.87 a month ago, and $2.98 per gallon on February 28 , when the US and Israel first struck Iran.
Food prices rose marginally in July by 0.1 percent for the month but were 3 percent higher than this time last year.
Growing economic pressures
The inflation comes amid a lacklustre jobs report last week, where the US economy lost 23,000 jobs, with most losses in retail trade, local government (particularly in education), and hospitality, while healthcare made gains, according to the BLS.
Days earlier, the Jobs and Labor Turnover Report (JOLTS), also from the BLS, showed little change in the number of people leaving their jobs for new ones, continuing a so-called low-fire, low-hire environment.
These combined factors have put pressure on the Federal Reserve as it gauges the path forward to reach its goal of 2 percent inflation. In July, the central bank kept interest rates at 3.50–3.75 percent.
Economists are divided on whether rates will rise or remain unchanged during the next policy meeting slated for September 16, which would be the third under the new chairman, Kevin Warsh, who took over from Jerome Powell in May.
CME FedWatch, a tool that tracks the likelihood of monetary policy decisions, forecasts a 61.6 percent chance of maintaining rates, while 38.4 percent believe that rates will increase to 3.75–4.00 percent.
US markets are responding. The tech-heavy Nasdaq is up 0.7 percent, the S&P 500 rose by 0.3 percent, and the Dow Jones Industrial Average is 0.05 percent higher since the market opened.
Gold prices, which are generally considered a safe investment during times of economic uncertainty, are up by 1.4 percent to $4,428 an ounce.
The inflationary pressures are overshadowed by the upcoming midterm elections. There are only two more inflation reports before the election.
Meanwhile, Americans are divided on which party is better suited to handle the economy. Slightly more Americans, or 37 percent, believe that Democrats are better at handling the economy, as opposed to 36 percent who believe that Republicans are, according to a Reuters/Ipsos poll released last week.