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inflation Continue to throttle in August, suggesting that the rapidly rising prices that have plagued the U.S. economy for the better part of three years during the pandemic are increasingly in the rearview mirror.
Sarah House, senior economist at Wells Fargo Economics, said overall inflationary pressures are “dissipating.”
this consumer price index The U.S. Department of Labor said it grew at an annual rate of 2.5% in August, measuring the pace of price changes in the U.S. economy. report Wednesday.
The figure was down from 2.9% in July, the lowest reading since February 2021.
However, there are still some potential concerns housing Economists say this is perhaps the most troubling of all. But the price of staple food is like groceries Gasoline prices have normalized and inflation appears to be trending significantly lower, they said.
“We expect inflation to continue to subside,” House said, although data were “somewhat choppy” on a month-to-month basis.
“tamed” but not “conquered”
The August inflation figure was down sharply from the pandemic peak of 9.1% in mid-2022, the highest level since 1981.
It is also close to the goals of policy makers long term goals About 2%.
“Overall, inflation appears to have been successfully contained, but as housing inflation Still refusing to ease as quickly as hoped, inflation has not completely disappeared.
With this in mind, the Fed is expected to begin cutting interest rates this month as its focus shifts from fighting inflation to avoiding a recession. Job market cooling.
central bank interest rate hike to a 23-year high during the pandemic, pushing up borrowing costs for consumers and businesses to tame inflation.
Both the House and Ashworth expect the Fed to cut interest rates by a quarter of a percentage point at its upcoming policy meeting next week.
Housing inflation is falling but remains high
As the U.S. economy reopens in 2021, real goods inflation surges.
The Covid-19 pandemic has disrupted supply chains, while Americans are spending more on their homes and less on services such as dining out and entertainment. Supply shortages coincide with increased consumer demand.
Economists said inflation in the services sector – which is typically more sensitive to labor costs – also rose sharply, in part because the labor market has historically exploded as employers are desperate for jobs as the economy reopens.
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Housing is included in the “services” category, used to be a big obstacle Economists say overall inflation will fall to the Fed’s target.
Housing is the largest component of the CPI and therefore has a huge impact on inflation data.
The U.S. Bureau of Labor Statistics said on Wednesday that the housing index has risen 5.2% since August 2023, accounting for more than 70% of the annual increase in “core” CPI. (Core CPI is economists’ preferred measure of inflation trends. It strips out food and energy costs, which can fluctuate.)
Housing inflation moves up and down at breakneck speeds because How does the government measureeconomists said.
Economists say the oddity of such data masks positive news for the immediate rental market, which has seen inflation stay at its lowest for two consecutive years. According to the Bureau of Labor Statistics, average rents in the second quarter of 2024 were actually down 1% from the same period last year (meaning prices actually fell) New Tenant Rent Index.
However, housing CPI inflation has seemed to defy gravity recently: rising month-on-month for two consecutive months, from 0.2% in June to 0.4% in July and then to 0.5% in August.
“Honestly, it’s baffling,” House said. “(But) I think we should continue to see a slowdown in demand for housing given the broader trends in the rental market.”
Other “noteworthy” categories
More broadly, other categories have “notable The Bureau of Labor Statistics said those that “increased” over the past year included motor vehicle insurance (prices increased 16.5% from August 2023), health care (up 3%), recreation (up 1.6%) and education (3.1%).
The surge in new and used car prices a few years ago is now likely to fuel high inflation in auto insurance premiums and vehicle repairs, as usually costs more Economists say this is to provide insurance and repairs for expensive cars.
They say insurance inflation should eventually subside as car prices fall. New car prices have dropped about 1% over the past year, and used car and truck prices have dropped more than 10%.
Egg prices soared in 2022 due to a historic bird flu outbreak. rise again after the deadly disease reappeared. They grew 28% from a year ago.
Overall annual grocery inflation fell below 1% in August, down from Average growth in 2022 is 11.4%the highest level since 1979.
Gasoline prices also fell by about 10% last year.
