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In a welcome respite from persistent price increases, US consumers experienced a slight pullback in the cost of living for the first time since the early days of the pandemic. The Bureau of Labor Statistics reported a 0.1% decline in consumer prices in June, bringing the annual inflation rate down to 3% from 3.3%. That decrease, driven by lower gas and car prices, heralds the slowest year-over-year price increase since May 2020, matching the modest rates seen in early 2021.
The unexpectedly positive inflation data has fueled optimism for a rate cut at the Federal Reserve. Interest rates have been at a 23-year high. Experts speculate that cuts could happen as early as September and possibly once again in December, depending on the continuation of these favorable inflation trends, according to Skyler Weinand of Regan Capital.
The prospect of easing inflation has boosted the stock market and pushed U.S. Treasury yields lower, suggesting future benefits for consumers such as lower mortgage and credit card rates. Investors tracked Dow futures up 80 points, with the S&P 500 and Nasdaq both up 0.3%.