After months of economic woes, there is good news for consumers in the United States as the Consumer Price Index (CPI) only recorded an 8.5 percent rise. 

These slower inflation numbers have invigorated the economy, as markets rose sharply. The news also comes as gas prices continue to go down as well.

According to the New York Times, stocks jumped on Wednesday following the release of the July Consumer Price Index. The rise was so high that the S&P 500 index rose 2.1 percent.

 It has now regained what it had lost over the past four sessions, which means the rally has pushed the S&P 500 into positive territory for the month after some big gains in July. This is the highest level it has attained since early May.

Investor Sentiment Improves as Inflation Begins to Subside

There is now an expectation among economists that inflation will begin to subside. This is helping investor sentiment despite the Federal Reserve's aggressive interest rate increases.

According to a New York Times report, companies remain profitable, and the jobs market is still in good shape.

Matthew Luzzetti, the chief U.S. economist at Deutsche Bank, said this is good for stocks, as equities are taking it positively in the hope that the Fed may become less aggressive in increasing their rates.

Bloomberg reported that the deceleration of inflation and the lowering of fuel prices have taken off some pressure from the Federal Reserve, which means that they might act less hawkish in their interest rates.

However, some investors are still weary, saying it is unrealistic to predict that inflation can slow down without any severe economic effects.

And despite these concerns by some investors, the S&P 500 is up nearly 15 percent from its low in June.

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Cost of Living in the United States Still High Despite Huge Gains

While dropping gasoline prices means good news for many Americans and a relief for President Joe Biden ahead of the midterm elections, Al Jazeera reported that the cost of living is still "painfully high."

Gas prices fell 7.7% in July, while utility prices fell 3.6% from June. That provides a big reprieve for most Americans struggling with rising costs.

Airfares have also dropped, going down by 7.8% from June. However, the same cannot be said for food, as food costs climbed to 10.9% from a year ago.

Even with the inflation decelerating, fed officials remain weary and said they still want to see more evidence that prices are cooling.

They will have their next policy meeting from September 20 to 21, which means they still have another monthly CPI to help determine their next interest rate policy.

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This article is owned by Latin Post.

Written by: Rick Martin

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