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US Inflation Rates Remain High Despite Slight August Drop

U.S. inflation rates slowed for a second consecutive month in August—the result of a significant drop in gas prices. Still, the costs of other goods remain stubbornly high. The Consumer Price Index rose 8.3% last month year over year, down from an 8.5% jump in July and a four-decade high of 9.2% in June.

Strip away volatile food and energy prices, and core inflation rose 0.6% from July to August. "Core prices typically provide a clearer read on where costs are headed than overall inflation," reads an article from AP News. "Stock prices tumbled and bond yields jumped on the worse-than-expected core figures, with many investors fearful that the Federal Reserve will turn even more aggressive in its drive to curb inflation."

The central bank is expected to announce another notable increase in interest rates in the coming week. "Two products that have been major drivers of inflation over the past year—gas and used cars—are now posting outright price cuts," per The New York Times. "But other goods and services are picking up in price so much that it is more than offsetting those declines … That is likely to keep the Fed firmly in inflation-fighting mode. Central bankers are waiting for a sustained slowdown in price increases to convince them that their policies are working to cool demand and nudge the economy back toward a healthy environment in which inflation is slow, steady and barely noticeable." 

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Wednesday, 27 September 2023

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