Bankrate reposted this
Today's CPI report appears to nearly solidify that the Federal Reserve will likely stick with a smaller quarter-point cut when it announces its interest rate decision next week. Let's start with the good news: Prices are continuing to slow. On an annual basis, overall inflation increased just 2.5%, the smallest since February 2021 (when inflation was just 1.7%). Perhaps most important for consumers, the BLS' measure of grocery prices increased just 0.9% from a year ago, the slowest gain since February 2020. On a monthly basis, those costs held steady for the fourth time this year. Even energy and gasoline were major bright spots in the latest report. Energy prices dipped 4% from a year ago, the sharpest decline since January. Gasoline costs sank 10.3%, the biggest decrease since July 2023. But it's not the measure that matters most for Fed policymakers. Excluding the volatile food and energy prices, so-called "core" inflation increased 0.3% from a month ago, marking the second straight pick up in a measure that experts say better reflects "underlying" inflation. The big troublemaker remains shelter, which accounted for 74% of the annual increase in prices last month, Bankrate calculations show. Last month, those prices rose the most since January. Car insurance remains another problem spot for consumers. Motor vehicle insurance rose 16.5% from a year ago and is up 49.8% since the start of the pandemic. And after a hot summer of travel, hotels and motels increased 1.8% from a year ago, the sharpest pickup since January. No matter what, it's important to always think about inflation the way consumers do. Slowing inflation does not mean prices are falling — just that they aren't increasing as quickly as they once were. Prices are up 21.2% since the pandemic began, meaning Americans would need about $1,212 to buy the same goods and services that originally cost $1,000. Those small changes can add up over time, with the extra expenses totaling $2,544 over a 12-month period. How are you feeling about inflation — and Fed policy — after the latest report? Read our new analysis: https://lnkd.in/eT7rFi9E