US inflation fell to 2.5% in August – down from 2.9% in July – which is expected to lead the Federal Reserve to cut interest rates next week. That could help Kamala Harris in the run-up to the presidential election.
It was the fifth straight annual decrease in consumer prices. From July to August, prices rose just 0.2%. Core prices, which exclude food and energy, rose 0.3% in August. The increase was slightly lower than estimated, which means economists are now expecting the Fed to cut interest rates by a quarter point. They are now at a 23-year high of 5.25 to 5.5%.
The drop in inflation is a small bit of good news for Harris, since cost-of-living concerns are top of mind for swing-state voters. If a rate cut helps boost wages, that could help the Democrats even more in an environment where over 50% of Americans wrongly believe the country is in a recession.
But good economic news doesn’t produce miracles. The Bank of Canada has cut rates three times this summer, without budging Justin Trudeau’sterrible poll numbers.