Category Archives: Consumer Price Index

April’s Consumer Price Index and Inflation

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CPI year-over-year inflation 4.9% as the economy showed signs of cooling 

Consumer prices in the U.S. rose 0.4% from March to April, up from 0.1% from February to March. Compared with a year earlier, prices climbed 4.9%, down just slightly from March’s year-over-year increase.

The nation’s inflation rate has steadily cooled since peaking at 9.1% last June but remains far above the Federal Reserve’s 2% target rate.

The Fed is paying particular attention to core prices, which exclude volatile food and energy costs and are regarded as a better gauge of longer-term inflation trends.

The Federal Reserve aggressively raised rates for more than a year to try to tame inflation by slowing economic activity, and indicated last week it might be done lifting them for now.

Core prices rose 0.4% from March to April, the same as from February to March. It was the fifth straight month that core prices have risen by 0.4% or more. Increases at that pace are far above the Fed’s 2% target.

Compared with a year ago, core prices rose 5.5%, just below a yearly increase of 5.6% in March.

Unlike the prices for products, the costs of services — from restaurant meals to auto insurance, dental care to education — are still surging. A major reason is that companies have had to raise pay in those industries to find and retain workers.

Federal Reserve officials say that fast-rising wages, while good for workers take home income, have contributed to higher costs in services industries because labor makes up a significant portion of there costs.

January 2023 CPI Inflation Grew at 6.4% annual rate

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January 2023 consumer price index (CPI) report showed that inflation grew at a 6.4% annual rate, slightly higher than expected, reports CNBC.

Stubbornly high January inflation reading and the December CPI report was revised to show a slight gain instead of a decline was largely better than feared, but at the same time unlikely to cause the Fed to back off from its tightening campaign.

“While there were no major surprises in today’s CPI reading, it is a reminder that while inflation has peaked it could be a while before we see it moderate to normal levels,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment office.

“The question remains if inflation will be able to fall to the Fed’s target levels with the labor market as tight as it currently is,” he added. “That could be the recipe for a soft landing, but it remains to be seen when the Fed will shift away from rate hikes and if the labor market will lose its resiliency.”

References:

  1. https://www.cnbc.com/2023/02/13/stock-market-today-live-updates.html

Invest with a purpose and a strategy. Pay yourself first.

The purpose of a system is to continue to play the game.

Consumer Price Index Jumped 7.1% in November

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The consumer price index (CPI), a key inflation barometer, jumped by 7.1% in November from a year earlier, the U.S. Bureau of Labor Statistics (BLS) reported. The CPI measures the year-to-year change in prices paid by consumers for housing, food and fuel. The BLS uses the CPI to track price changes for 80,000 goods and services.

In November, inflation moderated from its recent 9.1% peak in June 2022 but still remain higher than any point since the early 1980s. Consumer prices for goods and services have been rising at their fastest rate in four decades.

Although economists expected in November a 7.3% annual increase in inflation, a decline in the annual inflation rate doesn’t mean prices fell for goods and services; it just means prices aren’t rising as quickly.

How to Protect Your Money from Inflation

When inflation is rising at a rate higher than normal, here are steps you can take to protect the purchasing power of your dollars.

  • Trim your expenses. To minimize the impact of inflation, review your spending and identify areas to reduce or eliminate completely. It will free up money to invest so you can be better prepared for the future.
  • Wait to pay off low-interest debt. Paying off debt is usually good, but you may want to hold off on making extra payments if you have low-interest debt. Your debt becomes less expensive due to inflation. The extra money may be better used for other purposes—like paying off higher-interest loans.
  • Invest your money. Inflation causes your savings to be worth less over time. To hedge against inflation, you need to invest your money in the stock market. If the prospect of investing is scary, consider a diversified portfolio of index funds to lower your risk levels.

Inflation has ruined everything from going out to buying holiday presents, but, as recent signs show, it may finally be starting to cool in at least some segments of the economy. For example, gas prices are dropping very quickly.

References:

  1. https://www.forbes.com/advisor/investing/is-inflation-good-or-bad/