October 10, 2024
Inflation cooled in September – but just a little bit. The thing is — that’s not really the story – the story is – will today’s brand new ehhh report change the federal reserve’s mind about continuing to cut interest rates next month?
I’m going to get into that in this video. And before you start commenting these decreasing inflation numbers are fake. Or my personal favorite “where” – just watch the video first. Inflation decreasing doesn’t necessarily mean that prices are decreasing. It just means the rate of price increases is slowing. Also – even if you choose to believe that these numbers are fake – that’s your choice – but you should pay attention to them because the Federal Reserve doesn’t think they’re fake and these are the actual numbers they use to determine whether to raise or cut your interest rates.
So let’s talk about those numbers – the consumer price index for the month of September found – the average index for all items was 2.4% higher between September of 2024 and September of 2023. So why am I saying it fell? Because that number fell from august when the same average number was 2.5%. See – I told you it fell by just a little bit.
The reason why the inflation gauge didn’t go down more – was primarily because of the index for food and shelter both went up – both month over month and year over year. Again – those two indicators impact your everyday life – and the fact that they are not decreasing is probably one of the reasons why you don’t feeeeeeeeel like inflation is easing up.
The index for shelter increased almost 5% between September 2024 and September 2023 (4.9%) and it increased 0.2% between august of 2024 and September. And the index for food increased more than 2% (2.3%) year over year and 0.2% month over month.
So – the big question. What does this report mean for interest rates? Well – as I have told you repeatedly the Federal Reserve uses reports like this one – and that blockbuster jobs report that I told you all about in this video last week to make their decision about interest rates. Cutting them too much right now may run the risk of allowing inflation to spike up again, and waiting too long to cut them may run the risk of causing a recession. Last week’s super strong jobs report will likely ease their fears that the high interest rates were hurting the jobs market and today’s report shows yes inflation is definitely moving towards the fed’s 2-percent goal which is what they want to see but is it cooling enough to justify another cut?
Most economists and officials in the fed believe that another rate cut is definitely still possible when the fed meets and makes its announcement on November 7th.
Read the September Consumer Price Index here.
