Inflation dipped in August, but remains stubbornly high

0


Inflation remains high but down since June


Inflation remains high in August despite ongoing drop from June

05:14

Inflation in August slowed for a second straight month, although prices remain near a four-decade high as costs for items such as food and rent continue to climb.

The Consumer Price Index increased 8.3% in the past 12 months, as rising prices for groceries, shelter and medical care offset tumbling gasoline prices. The last inflation data amounts to a slight dip from July’s 8.5% jump, but was higher than economists had expected, showing prices remain uncomfortably high.

Core CPI, which excludes volatile food and fuel prices, rose 6.3%, up from 5.9% in July.

“Price levels continue to increase, they aren’t slowing down month-over month (e.g. accelerating, not decelerating) and this inflation problem isn’t going away quietly,” Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance, said in a note.

Stock markets soured on the report, with the S&P 500 plunging more than 3% in morning trading. The Dow lost 2.7% and the Nasdaq slid 3.9%.

A report earlier this week from Adobe indicated that online prices showed a surprise increase last month, driven by apparel, personal care and groceries.

“Unpleasant surprises aplenty are found in the August Consumer Price Index,” noted Mark Hamrick, senior economic analyst at Bankrate, in an email. “The prices for necessities continue to fuel this fire, including shelter, food and medical care.”

He added, “The substantial decline in gasoline prices is noteworthy but doesn’t address the overall problem with inflation.”


What’s behind surging rent prices across the U.S.?

03:00

Still, consumers are expecting costs to fall further later this year. A survey from the New York Fed on Monday showed consumers expect no increase in home prices in 2023, consistent with predictions from Goldman Sachs that home prices would flatline

At the same time, the Federal Reserve is expected to continue hiking its benchmark interest rate when it meets later this month. The central bank has raised the federal funds rate four times this year in a move to slow the economy and arrest spiraling inflation. Economists predict another hike of 0.75 percentage points at the Fed’s September meeting.

“The Fed was already in a hawkish mood and this data release will do nothing to deter that,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a note. “Nevertheless, with inflation expectations almost back down to normal levels … we still expect both headline and core inflation to fall more quickly over the next 12 months than officials currently believe.”



Source link

Denial of responsibility! Planetconcerns is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment