Inflation decreased for a second consecutive month in August, but prices remain near a four-decade high as food and housing expenses continued to rise.
In the past year, the Consumer Price Index grew 8.3% as rising costs for food, lodging, and medical care were offset by falling gasoline prices. The increase is less than the 8.5% jump in July, but greater than what economists had predicted, indicating that prices remain uncomfortably high.
The core CPI, which excludes volatile food and fuel costs, increased by 6.3%, up from 5.9% in July.
As a result of the report, the S&P 500 is expected to open 1.7% down. Adobe reported earlier this week that internet prices increased unexpectedly last month, driven by clothes, personal care, and grocery.
The August Consumer Price Index has some unpleasant shocks, according to Mark Hamrick, senior economic analyst at Bankrate. Prices for necessities, including shelter, food, and medical care, continue to stoke this fire.
He continued, “The significant drop in fuel prices is noteworthy, but it does not solve the inflation problem as a whole.”
Nonetheless, shoppers anticipate additional price declines later this year. Monday’s study by the New York Fed revealed that consumers anticipate no increase in home prices in 2023, corroborating Goldman Sachs’ forecast that home prices would remain unchanged.
In addition, it is anticipated that the Federal Reserve will continue to raise its benchmark interest rate when it meets later this month. This year, the central bank has hiked the federal funds rate four times in an effort to slow the economy and stop inflation from ballooning out of control. Economists anticipate another 0.75 percentage point increase at the September Fed meeting.