Consumer confidence about inflation is shifting despite recent price increases
Something interesting is emerging when it comes to the next chapter of the inflation story. For context, in the decade before COVID-19, the annual inflation rate (as measured by the Consumer Price Index (CPI)) ran at about 2 percent. When the global economy shut down and commerce essentially halted due to the pandemic, the annual inflation rate bottomed at 0.1% (May 2020).As the economy opened in fits and starts – and the global supply chain was gnarled up, inflation accelerated in a big way.
It took 15 months for the rate to peak at 9.1% in June 2022, before retreating to 3% a year later. But despite the Fed hiking interest rates to two-decade highs, progress on bringing down inflation has slowed down to a crawl over the past 18 months. From June 2023 to June 2024, the annual rate bounced between 3 to 3.5%, and over the past six months, we have seen the rate fluctuate between 2.4 and 3%. With that backdrop, it was hard to get fired up about the November CPI, which showed an acceleration in prices during the month, pushing the annual rate up by a tenth of percentage point to 2.7% from 2.6% in October. Cue the sad trombone. But the news wasn’t all bad. For most of the year, the biggest contributor to the elevated inflation rate has been shelter. According to the government, the cost of housing increased by 4.7% from a year ago, accounting for nearly 40% of the increase in overall prices last month. Although housing inflation remains above the average 3.3% annual increase in the five years before the pandemic, it continues to decelerate from a four-decade peak of 8.2% in 2022. What seems different now is that while we all whine about prices, there has been a shift from the general negativity that infused the election polling about the economy overall and inflation in particular. A new survey from the Federal Reserve Bank of New York showed that consumers believe that the inflation rate will remain at about these levels in the coming year
INFLATION ECONOMY CONSUMER CONFIDENCE FEDERAL RESERVE SHELTER COSTS
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Fed Slows Rate Cuts, Inflation Remains StickyThe Federal Reserve cut interest rates by a quarter-point for the third time this year, but signaled a slower pace of reductions in 2024 due to persistent inflation. Policymakers projected just two rate cuts in 2025, down from their September estimate of four. The Fed's benchmark rate now stands at 4.3%, nearing a 'neutral' level that neither stimulates nor hinders the economy. While rate cuts have made borrowing cheaper, inflation remains stubbornly above the Fed's 2% target at 2.8% in October.
Read more »
Weekly economic and financial commentaryUnited States: Sticky Inflation, Sticky Wicket for the Fed Price data this week showed that inflation remains stubbornly above the FOMC's target.
Read more »
Stifel says a 10%-15% S&P 500 correction is coming because of sticky inflationThe broad measure of the market widely used by professionals has gained more than 27% in 2024.
Read more »
Sticky inflation, Trump bring obstacles to Fed's path to lowering ratesThe Federal Reserve is facing an increasingly uncertain path forward with inflation still lingering after two years of elevated rates
Read more »
Sticky inflation, Trump bring obstacles to Fed's path to lowering ratesThe Federal Reserve is facing an increasingly uncertain path forward with inflation still lingering after two years of elevated rates
Read more »
Sticky inflation, Trump bring obstacles to Fed's path to lowering ratesThe Federal Reserve is facing an increasingly uncertain path forward with inflation still lingering after two years of elevated rates
Read more »