September 11, 2024
Inflation just hit a low we haven’t seen in more than three years. That doesn’t mean we’re out of the woods – but it definitely means we’re going to see an interest rate cut next week.
So first – let’s talk about the actual numbers. The consumer price index fell to 2.5% between August 2024 and August 2023 yes – that means prices are up 2.5% from last year but it’s down from July of 2024 when the inflation gauge was at 2.9%. Keep in mind – the federal reserve’s goal is to have prices increase at an annual rate of 2-percent. And in august it was at 2.5%. So we’re almost there.
Also another quick reminder – when inflation numbers come down that does not necessarily mean prices are coming down – they may – but what it means is prices aren’t increasing as fast as they were. No that that’s out of the way – let’s talk about where we’re still seeing inflationary problems.
Shelter – has consistently been an issue and according to the Bureau of Labor Statistics it was the main factor in that 2.5% number in August as well. The report found shelter was up more than 5.2% year over year and +0.5% month over month between August 2024 and August 2023. It was also up 0.5% between July 2024 and August 2023.
Food overall was up just barely above the Fed’s goal. Between August 2024 and August 2023 food was up 2.1%.
But on the flip side – overall energy was down 4% year-over-year (-0.8% month over month) with gasoline leading the charge – down 10.3% year over year and down -0.6 month over month from August of 2023.
A couple of other things I want to point out – I’ve been noticing it for months and you’re probably noticing it too — the report found car insurance is up 16.5% between August 2023 and August 2024 (+0.6% month over month). And you guys always worry about coffee for whatever reason – it was down more than 2% year over year (+1.7% month over month)
Now – let’s talk real quick about interest rates and what this report means. Well – it means exactly what I’ve been saying for the last few months – next week the federal reserve will be cutting interest rates. The question is – by how much. Will it be a quarter percent? Or half percent? We won’t know until next Wednesday. The Federal Reserve has what they call a “dual mandate.” To keep prices steady and to ensure maximum employment. In the last month or so – because of reports like this and others I’ve reported on this page– the fed has expressed confidence and the number show their policies have successfully brought inflation down so almost achieving price stability goal of 2-percent year over year inflation. But they’re concerned now about jobs market and whether these high interest rates are preventing maximum employment.
Read the August CPI report here.
