September 13, 2023
Inflation is going in the wrong direction and this will definitely factor in to whether the federal reserve will increase interest rates next week.
According to today’s the brand new consumer price index report for the month of August inflation saw the biggest monthly increase of 2023. Between July and august overall the costs for every single product and service was up 0.6% and between August of 2023 and 2022, inflation was up 3.7%.
So what’s fueling this increase? Energy. Specifically — gasoline which was up (10.6%) in August. And that checks out – we talked a lot about increased gas prices on my page especially last month. Now – when you look at gas prices year over year — the report found gas prices were actually more than 3% lower in August of 2023 than they were in august of last year – but month over month it’s definitely up.
Shelter is also a big contributor. Overall the cost for a place to live has increased every single month for the last 40 months! In August shelter was 7.3% more expensive than it was in August of 2022.
Overall — food also increased between July and August and it’s 3% more expensive than August of 2022. The biggest culprits – cereals and bakery products which went up 6% between 2022 and 2023. The other big increase came from non-alcoholic beverages – those increased 4.8% year over year.
So – what does all this mean for interest rates? Well, this report is the last major factor that the federal reserve will consider when they decide whether to raise interest rates in just a few days. The Fed chairman has said he expects at least one or more quarter percent increase in interest rates in 2023 before beginning to cut rates in 2024.
After next week – there will be two more federal reserve meetings. And we know they are not afraid to raise rates again to get this inflation under control even if people lose their jobs and it gets impossible to get a mortgage or a loan. So will that quarter percent increase come in September or later? Or will there more than one increase? Or will the fed decide not to raise rates at all this month? We’ll all know next week.
Read the inflation report here.
