11/13/2023 0 Comments Nxfilter slow to lognin![]() Those decreases are expected to manifest in the data in the coming months, and new forecasts from the San Francisco Fed suggest a severe contraction will occur next year. The shelter component of CPI is a lagging indicator of rents, which current market data shows are on the decline. “Going forward, I really think you’re going to see relief, vis-à-vis the core estimate of inflation, around rents, new vehicles and used vehicles,” Joe Brusuelas, principal and chief economist for RSM US, told CNN. While an upward swing after a year’s worth of cooling could be anxiety-inducing, economists say an uptick doesn’t necessarily signal a return to the decades-high inflation rates of last year. The Dow, S&P 500 and the Nasdaq were each up about 1% after the report was released but have since settled slightly. US indexes moved higher on the news as well. The markets seemed to agree: The probability of the Fed holding steady at its September meeting increased 4 percentage points to around 91% on Thursday, according to the CME FedWatch Tool. “This approach can make clear that the Fed will not allow inflation to reignite and that policy will remain restrictive in the face of strong consumer demand and wage growth but that past action can be allowed to continue to do the work that now appears to be bearing fruit.” ![]() “The July 2023 report’s core CPI result should reinforce the view that the Fed can begin to rely more heavily on hawkish rhetoric than on further interest rate hikes,” wrote Kurt Rankin, PNC senior economist, in a note Thursday. Since March of last year, the Federal Reserve has raised interest rates 11 times to the highest level seen in 22 years in hopes of reining in inflation by tempering demand. Persistently high inflation - specifically grocery, gas and rent prices - has weighed on Americans for more than two years. “We’ve made this progress while maintaining the broad strength of our economy: Unemployment remains near record lows, a higher share of working age Americans are working now than in 20 years, real wages for the average American worker are growing and are higher than they were before the pandemic - with lower wage workers seeing the largest gains,” he said. “Annual inflation has fallen by around two thirds since last summer, and inflation outside of food and energy has fallen to its lowest level in any three-month period since September 2021,” Biden said in a statement issued Thursday morning after the report was released. President Joe Biden on Thursday said the latest CPI report shows the US economy “remains strong.” Witthaya Prasongsin/Moment RF/Getty ImagesĪmericans are pulling money out of their 401(k) plans at an alarming rate In June, prices increased 0.2% for the month and 4.8% annually. Declines in used car prices as well as airfares helped to bring core CPI lower. July is the the fourth consecutive month that annual core CPI has eased, and the 4.7% rate landed 0.1 percentage points below consensus expectations. “Inflation is slowing and doing so across a broader range of goods and services.”ĭespite the uptick in the headline number, the July report showed that underlying inflation continued its cooling streak.Ĭore CPI, which excludes the more volatile food and energy prices, increased 0.2% from June and was up 4.7% from the year-ago period. “Don’t be fooled by the uptick in inflation,” said Julia Pollak, chief economist with employment site ZipRecruiter, in commentary issued Thursday. ![]() ![]() Prices rose 0.2% on a monthly basis, driven by shelter costs, which accounted for 90% of the increase, the BLS report said. The annual headline rate’s increase, which was largely due to year-over-year comparisons to July 2022 when monthly inflation turned negative, came in below economists’ expectations for a 3.3% annual gain. The Consumer Price Index rose 3.2% for the year through July, up from June’s 3% annual increase, according to data released Thursday by the Bureau of Labor Statistics. For the first time in more than 12 months, the pace of consumer price hikes accelerated on an annual basis. ![]()
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