Recently the US experienced a significant drop in inflation, as it hit a two-year low, sending positive ripples through the stock market and precious metals industry. This unexpected development has sparked optimism among investors and raised hopes for economic stability. The U.S. Bureau of Labor Statistics unveiled the latest Consumer Price Index report for June on Wednesday, July 12, 2023, revealing a significant decline in inflation. The report indicated a 3% increase, marking the lowest level since March 2021. Impressively, this marks the twelfth consecutive month of declining inflation, with the index rising by a modest 0.2% on a monthly basis.
Latest data from the Labor Department’s Consumer Price Index (CPI) reveals a 3% inflation rate
According to the recent release of the Consumer Price Index report by the U.S. Bureau of Labor Statistics on Wednesday, inflation in the United States continues to subside. Since June 2022, there has been a consecutive decline in inflation each month. In June 2022, the inflation rate stood at 9.1%, but the latest CPI data shows a significant drop to 3%.
The CPI report provides further insight: “The Consumer Price Index for All Urban Consumers (CPI-U) experienced a 0.2 per cent increase in June on a seasonally adjusted basis, following a 0.1 per cent rise in May. Over the past 12 months, the all items index rose by 3.0 per cent before seasonal adjustment.”
Stocks Rally on Positive CPI Report, Boosting Market Sentiment
Following Wednesday’s news of US inflation hitting two years low, the stock market displayed a strong performance, as major indices such as the S&P 500, Dow Jones Industrial Average, Nasdaq Composite, and Russell 2000 all concluded the day with gains. The S&P 500 experienced a rise of 0.74%, while the Russell 2000 saw a notable jump of 1.05%. The Nasdaq Composite increased by 1.15%, and though the Dow had the smallest gain, it still managed to climb by 0.25%. The positive sentiment on Wall Street is attributed to the impact of the CPI report.
On July 12, there were positive movements in the prices of gold and silver, with gold experiencing a 1.3% increase and silver rising by 4.13%. However, the global cryptocurrency market capitalization declined by 0.77% on the previous day, reaching $1.18 trillion. Bitcoin had a loss of 0.61% over the past 24 hours, while Ethereum decreased by 0.25% against the U.S. dollar. Both major cryptocurrencies displayed a limited price range and showed a lack of significant performance on Wednesday.
On Wednesday, George Mateyo, the chief investment officer at Key Private Bank, stated to CNBC that there has been notable advancement in addressing inflation concerns. He emphasized that the latest report confirms a positive trend, as inflation is starting to subside despite the hotter temperatures experienced across most parts of the country.
Biden expresses satisfaction over the reduction in inflation, but skeptics raise doubts about its actual effect on the middle class
After the report’s release, President Joe Biden and the White House wasted no time claiming responsibility for the decline in inflation numbers. Biden took to Twitter, stating, “Today, we received news that annual inflation has decreased for 12 consecutive months, reaching 3% – the lowest level in over two years. My campaign aimed to foster economic growth from the middle class and bottom-up, rather than a top-down approach. We are now witnessing Bidenomics in action.”
Biden’s tweet on Wednesday didn’t garner universal praise. In response to his statement, one user countered, “Anyone who spends a mere 5 minutes in a grocery store can see that this figure is deceitful and manipulated. Inflation is well beyond 20%.” Another individual expressed, “The implementation of Bidenomics means that our families are struggling to afford essential items like food and fuel. The middle class has been severely affected by Bidenomics.”
The latest Consumer Price Index report showcased a continued cooling of inflation in the United States, US inflation hit a two-year low, Â marking a significant drop. This positive development profoundly impacted various sectors, including stocks, which rallied and closed in positive territory. Precious metals like gold and silver also experienced gains, while the cryptocurrency market slightly declined. Overall, these trends reflect renewed optimism and stability in the economic landscape.
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