Inflation hits lowest level since spring 2021, most likely teeing up rate cuts

Retail sales rose 1 percent in July, reversing a June slowdown and marking the largest jump in more than two years.

Federal Reserve officials have said they won’t trim borrowing costs until they’re confident that prices are easing back to normal.

Inflation dropped in July to its lowest level in three years on an annual basis, setting up the Federal Reserve to cut interest rates soon to take pressure off the economy.

The snapshot was the clearest indication yet that inflation is heading back to normal levels from 40-year highs — without a recession. Central bankers won’t be caught celebrating, scarred by years of unexpected twists that repeatedly upended the Fed’s inflation fight. But officials will close out the summer with the surest sense yet that it’s time to loosen up on the economic brakes, possibly starting next month.

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