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US: Dow, Nasdaq, S&P record steep decline as inflation remains high

US: Dow, Nasdaq, S&P record steep decline as inflation remains high

Wall Street recorded its worst day since June of 2020 as inflation in the United States remained at extreme levels throughout last month, with major markets also witnessing a steep decline amid increasing food, housing, and medical care costs.

According to the Labour Department, over the 12 months since August, prices have increased by almost 8.3%, which is faster than the 8.1% predicted by economists.

However, the rate was lower than the 8.5% recorded in July, owing to lower petrol prices.

Nasdaq fell by over 5%, S&P by 4.3%, and the Dow Jones Industrial Average plunged by around 4%, marking the sharpest decline in more than two years.

This also indicated trouble for US President Joe Biden as the country gears for national elections, which are due in November and would determine whether the Democratic party will maintain its control over Congress.

Earlier in June, inflation reached an all-time high as it hit 9.1%, and dropped to 8.5% in July as petrol prices dipped.

In a statement earlier this week, Biden stated that the prices remained mostly flat in the country over the last two months, bringing much relief to the people.

A month has also passed since the Inflation Reduction Act was passed in Congress, but some believe that the bill will not have any meaningful impact on consumer prices.

In the twelve months to August, the cost of groceries in the country have hiked up by 13.5%, with housing up by 6.2%, and medical care by 5.6%.

Although energy costs saw a sharp decline in the past two months, almost 10%, it was still higher when compared to the previous year.

On the whole, the consumer price index which records goods and services across the economy, was 0.1% higher in August than July, as increases in other areas offset the fall in petrol prices.

Similar to other central banks worldwide, the US Federal Reserve has also been hiking interest rates to curb inflation and is expected to announce another hike later this month as well. 

Although these hikes are meant to subdue demand from businesses and households, it also increases the risk of recession due to a slow economy.

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Meghna Singh

An English Literature graduate, Meghna Singh ventured into the profession of content development to incorporate her knack for writing articles across verticals including technology, healthcare, business, and alike for News Origins and Newsorigins. She has also completed her MBA in Tourism and worked as a content creator in the field of product development.