Inflation in the United States is rising at its slowest rate in two years.

According to figures, inflation jumped 3% year on year to June, up from 4% in May.

Inflation has dropped substantially from a record of more than 9% in June 2022, with the most recent data representing the smallest rate since March 2021.

According to the data, a series of interest rate hikes has crimped soaring prices.

Analysts expected the US Federal Reserve to boost interest rates again this month.

According to Brian Coulton, chief economist at Fitch Ratings, the US inflation decrease in June was “really only a small step in the right direction.”

“With a still tight labor market and sticky wage growth, the Fed’s recent concerns about inflation persistence persist,” he added.

According to the Labor Department, increased housing expenses drove the increase in US inflation in June.

In contrast, used car and truck prices fell, while the cost of food items such as pork, milk, and eggs fell. After the Ukraine crisis interrupted global food supplies, many households faced higher shopping expenditures.

The data highlight the comparatively swift progress made by the United States in containing price increases, particularly when compared to the United Kingdom, where inflation touched 8.7% in the year to May despite a number of interest rate increases.

Danny Blanchflower, a former member of the Bank of England’s rate-setting committee who is now a Dartmouth professor of economics, believes the US economy is more agile than the UK.

He claimed that Brexit had hurt the UK economy, making it more difficult for businesses to do things like switch supply chains to lower-cost alternatives.

“There’s been a Covid shock for everyone, and a war shock for everybody,” he remarked. “The question is what distinguishes the UK from everywhere else, and I would say the answer is Brexit.”

In the United States, the Federal Reserve has raised interest rates from near zero to 5% since March of last year in an effort to calm the economy and relieve pricing pressures.

The Federal Reserve’s policymakers have indicated that they are likely to hike rates again this month, and many expect further increases later in the year.

Concerns regarding so-called core inflation have been raised by officials. This metric excludes food and energy prices, which can change from month to month.

Core inflation appears to be slowing at a rate that would keep inflation above the bank’s 2% objective.

However, the most recent US Labor Department data showed that core inflation was lower than projected. Between May and June, it increased by 0.2%, the smallest growth since August 2021.

Core inflation fell to 4.8% in the year to June from 5.3% in the previous year.

Following the data, the three major US stock indices opened higher.

“A buoyant growth rally suggests that the market is seeing a faster exit out of this elevated rate environment,” according to Geir Lode, head of global equities at Federated Hermes Limited.

“Today’s results will be welcomed by the Fed, but they will want to avoid further inflationary pressures in the near future, so we do not expect easing before the middle of next year.”

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