Step Back – The August Inflation Report
We are 9 months into 2023, and inflation is still the most persistent issue plaguing the US economy at the moment. The past year and a half have brought historic rate hikes to combat inflation along with large debate over a “hard” or “soft” landing, with the opinion seeming to shift every month. Inflation has fallen from a multi decade high of 9.1 percent in the summer of 2022, but the Federal Reserve is seeking more progress to hold off on rate increases.
Unfortunately, on Wednesday, the August inflation report caused more stress among investors. The consumer price index rose by 0.6 percent from July to August, with overall inflation sitting at 3.7 percent. One of the main causes is due to energy prices rising rapidly in the past few weeks as a result of production cuts across the globe from countries like Saudi Arabia and Russia. Gas prices rose by 10.6 percent from July, the largest single-month increase since the infamous summer of 2022, contributing to the overall figure ending up much higher. However, when looking at core inflation, which excludes food and gas costs due to their volatility, it fell to 4.3 percent, which was a positive factor from the report. This insight will likely help the Federal Reserve maintain their stance of holding rates where they are at the next meeting, but pushback from energy inflation was not well received by citizens. Despite economists using core inflation as the metric to determine what needs to be done, food and energy costs are things that citizens deal with every day, painting this report negative in the eyes of most.
Want to learn how to invest? Download the Invstr app, where you can play Fantasy Finance and manage a virtual investment portfolio or open a brokerage account and invest for real. Take our interactive investing course on Invstr Academy and become a better investor today!
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.