August 14, 2024
Inflation just hit the lowest number we’ve seen in more than three years.
That number is 2.9%
And before you say that’s a fake number and you don’t feel inflation going down it in your every day life please just watch the video before you comment so you understand what these numbers mean for you.
These inflation numbers come from the Consumer Price Index report that was released today for the month of July. It’s super important for you to understand – just because the numbers show inflation numbers are going down that does *not* necessarily mean prices are coming down. It just means the rate of price increases is slowing down. That means generally prices are not shooting up dramatically the way they were a few years go. The federal reserve’s goal is to have prices go up 2% every year. That’s the goal. So as of July we’re at 2.9% for everything – not excluding anything.
Let’s put 2.9% in context. Here is the last 20 years of CPI inflation numbers. Here we are July 2024 – 2.9%. This major spike was June 2022 when inflation hit 9.1%– I covered that a lot on this page. But you can see here since then we’ve seen a steep drop in inflation numbers. This low here was May of 2020 in the thick of the pandemic when the whole world was shut down and inflation was just 0.1%. That’s when supply chains were broken down, people were fighting over toilet paper…you see that thin grey line that’s an officially declared recession which we saw for brief moment during the pandemic and yes I covered that extensively too. That 0.1% is well below what the fed wants to see. But you can see for yourself – that’s where this inflation started. You can see since then it just shot straight up. And because I know you’re going to ask, here are the Trump years. And prior to the pandemic, inflation averaged about 2.2% between February of 2017 and February of 2020. In those years it peaked at 2.9%.
Now that you understand how these inflation numbers work and the context let’s talk about the we’re seeing today and what it means for you? First – you should know – this report further solidifies the chances that the federal reserve will cut interest rates next month. As for the report itself – it found on average inflation for everything including goods, services and everything we buy and eat – not excluding anything was 2.9% higher in July of this year compared to July of last year. The report also found inflation crept up between June and July of this year by – 0.2%.
The item that primarily caused this 2.9% number was the index for shelter – which was up 5.1% higher than July of last year. We all need shelter every month so it’s a real problem to our personal finances when that number is so high. As for the other things we all need every month — the report found gas prices were down more than 2% from July of last year. And found that food prices increased more than 2% from last July.
It also found significant drops in the used cars and trucks index and airfares. Because I also know you’re going to ask –yes coffee was included, it was down 0.4% between July of this year and July of last year.
Read the July Consumer Price Index here.
