Prices are "way down" in the USA, with virtually no inflation.

Prices are "way down" in the USA, with virtually no inflation.

Inflation in the United States has shown signs of stability in recent months, with prices remaining relatively unchanged. According to the latest Personal Consumption Expenditures (PCE) data released on July 29, 2025, prices rose at an annual rate of 2.6% in July, matching the figure from June. This indicates that inflation remains persistent but has not accelerated significantly [1].

Consumer spending also continued to rise, with a 0.5% increase in July, suggesting that Americans are maintaining their spending habits despite economic uncertainty. However, consumers are becoming more cautious with discretionary spending, opting to spend less on travel, dining out, and transportation [1]. This cautious approach could have broader implications for the economy, given that consumer spending accounts for roughly two-thirds of economic activity.

The University of Michigan consumer sentiment survey, released on the same day, indicated that Americans are increasingly concerned about inflation. While inflation has cooled since its peak in 2022, it remains stubbornly above the Federal Reserve's 2% annual target. Higher prices for groceries and electricity are contributing to consumer discomfort [1].

Tariffs, which have been a source of concern, have not yet significantly impacted inflation. The price of goods, which are more susceptible to tariffs than services, cooled slightly in July, decreasing by 0.1% from the previous month. This suggests that tariffs have had a minimal impact on prices so far [1]. However, analysts warn that inflation could increase in the coming months as tariffs start to trickle through the economy.

The latest inflation data has led most Wall Street analysts to predict that the Federal Reserve will lower interest rates at its September meeting. The likelihood of a rate cut is currently at 87% according to CME Group's FedWatch tool [1].

In summary, while inflation in the USA remains stable, consumers are becoming more cautious with their spending, and tariffs could potentially impact prices in the future. The Federal Reserve is expected to respond with interest rate cuts to support the economy.

References:
[1] https://www.cbsnews.com/news/inflation-pce-tariffs-consumer-spending-fed-rate-cut/
[2] https://finance.yahoo.com/video/inflation-data-lisa-cook-latest-131852749.html