Inflation Softened in July

Housing slump, fuel prices weaken spending
By Heather McPherson,  Newser User
Posted Aug 15, 2007 9:52 AM CDT
Signs mark the prices at the Wal-Mart store in Williston, Vt., Monday, Aug. 13, 2007. Wal-Mart Stores Inc. reported a 49 percent increase in second-quarter profits, but the world's largest retailer cut...   (Associated Press)

(Newser) – Consumer prices in the US in July rose at the slowest rate in eight months. The housing slump—and fuel costs—have weakened consumer spending considerably, forcing retailers to slash prices, Bloomberg reports.  Prices rose only rose 0.1% in July, as predicted by analysts. Yields of U.S. Treasury securities fell following the report.

The softened prices should give the Fed room to maneuver, should slower growth or continued turmoil in the markets demand a rate cut. "The Fed wants to be convinced that inflation is moderating and I think that the CPI report does this," says a Cleveland economist.