The rate of US inflation fell in July, government data showed, with falling petrol prices providing some relief for Americans who dealt with price increases in June.
Consumer prices were up 8.5 per cent year-on-year in July, the US Labour Department reported, down from a 9.1 per cent rise in June.
Besides petrol, other consumer prices which sank from June to July were airfares, which dropped nearly 8 per cent. Hotel room costs fell 2.7 per cent and used car prices dropped 0.4 per cent. Such items had previously delivered some of the economy’s steepest price jumps.
Those declines lowered so-called core inflation, a measure that excludes the volatile food and energy categories to provide a clearer picture of underlying inflation. Core prices rose 0.3 per cent from June, the smallest month-to-month increase since April.
Wednesday's report raised hopes that the Federal Reserve will announce a less-aggressive interest rate increase at its meeting in September. The central bank has raised the key interest rate by 75 basis points in back-to-back meetings in an attempt to cool down the nation's 40-year high inflation.
President Joe Biden said the report was “some good economic news” that showed the “kind of economy we’ve been building”. But he acknowledged that the work is “far from over”.
Last week's job report, which showed that the economy added 528,000 jobs in July, heightened expectations the Fed would issue another three-quarter-point increase.
What $20 million can buy you in California — in pictures
The White House has pointed to lowering gas prices as a sign that its policies are easing costs that have strained Americans' finances, while the topic has become a central issue for Republicans as they look to gain control of at least one chamber of Congress in the midterm elections.
Mr Biden's approval rating has jumped to its highest in two months, data from a recent Reuters/Ipsos poll showed. Approval rose to 40 per cent, while disapproval fell to 55 per cent.
The president's modest poll boost comes as he has scored several notable victories, including passing a multibillion dollar semiconductor bill, expanding healthcare access for veterans and conducting a successful drone strike on Al Qaeda leader Ayman Al Zawahiri.
On Friday, the US House is expected to approve a renewed economic and climate package pushed by Mr Biden and top Democratic politicians.
Some analysts have said the legislation, named the Inflation Reduction Act, would have a negligible effect on soaring consumer prices.
Agencies contributed to this report