Bad News: Inflation Still Too High, Consumer Prices 8.5% over Well above the 2% that government policymakers consider healthy. Americans still feel sticker shock in their daily lives.
Refueling Costs, particularly gas prices, have eased in recent months, and the annual core Inflation has risen to remove more volatile factors such as energy and food It was 5.9% year-on-year, matching the increase in June.
CNN’s Rachel Solomon said in an appearance on “Newsroom”: “If you look at the big picture so far, you can see that it seems to be easing compared to January 2020.”
Solomon said a single report like Wednesday’s may have no impact on the Federal Reserve’s aggressive plan to curb inflation. It’s a pattern for this kind of reporting across months.
Gas prices are going down…
Gas prices fell 7.7% from June to July, but are still 44% higher than a year ago. In the real world, that means gasoline prices have fallen from a record average of over $5 a gallon in his early June to a national average of just over $4 on Wednesday, according to AAA.
A short-term decline in fuel prices offset the rise in other areas such as food, housing and electricity.
“You can’t cut food and rent, so you have to look very carefully,” CNN global economic analyst Lana Voruhah said in an appearance on The Newsroom.
“We’re cutting back on a lot of things people can cut back on, like taking vacations, buying new cars, buying certain products for the home, and I think that’s one of the reasons. We are witnessing declining demand and declining inflation. But I am concerned about what cannot be cut: where we live and what we eat.
Food prices rise, affecting everyone
Overall inflation has been flat over the past month, but food prices have not fallen.
CNN’s Vanessa Yurkevich went to a grocery store in Philadelphia to talk to shoppers about costs. She found Ken Elder. Ken Elder, a retiree living on Social Security wearing a decrepit Grateful Dead T-shirt, has changed his daily shopping habits since prices rose. “Especially with meat and dairy,” he said.
White House official Gene Sperling, who appeared on CNN after Urkevich and Elder, said lower gas prices were a start and could save Americans money.
“No one here is saying things are going well enough,” he told CNN’s Ana Cabrera. “Prices are still too high, hitting families too hard on the grocery line. Gas pumps are doing better than they used to.”
Gas prices could rise again at any moment, depending on what happens both with Russia’s war in Ukraine and with OPEC, the cartel that drives oil prices.
housing is a bigger problem
Housing is the largest single expenditure and driver for most households. This is a huge factor in core inflation, which remains high.
Before the CPI report was released, CNN’s Martha White took a look at housing, noting that the Federal Reserve’s anti-inflation measures (increasing interest rates) have made it even more expensive to buy a home. pointed out.
Key line: Companies are hiring, but production is down. Consumers are pessimistic about the future, but they continue to spend. The economy was supposed to zig-zag, but even experts are looking for answers.
do not celebrateMore turmoil ahead
Larry Summers, former Treasury secretary to Bill Clinton and economic adviser to Barack Obama, has served as a gadfly to President Joe Biden and the current Federal Reserve, pushing government spending and early interest rate hikes. criticized the failure of
He noted that many economic watchers were overexcited after March’s good CPI report and were hit by the massive inflation reported through June.
“I think we have to maintain a sense of uncertainty and wait for the data to come,” Summers said. said on MSNBC. “I still think that this country has a very serious inflation problem. I think” “
things may not feel cheap yet or soon
Chances are you haven’t read the CPI report, but it would be disconcerting to Americans shaking their heads at the cost of chicken thighs.
“How you feel about the economy as an individual can be as important as all the stats in the world…and I know a lot of people are saying, ‘The grocer and the pump. said Forher.
But for economists, reports like Wednesday’s suggest the Fed could actually keep interest rates higher and inflation lower without pushing the economy into recession. doing.
It is not yet clear whether it is the Fed’s actions (a series of massive rate hikes) or the shock among Americans from soaring energy and food prices that are slowing inflation.
In addition to the CPI report, the Fed will also be watching last week’s jobs report, which showed much better-than-expected job and wage growth (which could, in theory, drag on inflation). in September. On Wall Street, traders had already tempered their expectations of the size of the new rate hike.
And really, no one knows what will happen in the next few years.
Source: www.cnn.com
