The latest consumer prices report shows cost of living is still rising far above the Fed’s target. But don’t expect monetary policymakers to aggressively hike rates.
The rising cost of living doesn’t hit all Americans equally. Yet the benchmark figure for charting the rising cost of living excludes people in rural areas.
Despite the highest inflation rates in 40 years, Apple chose not to raise prices on its gadgets. More bizarre, the consumer price index suggests smartphones are 20% cheaper than a year ago.
Inflation remained near a 40-year high due to a jump in the cost of food and shelter. But that might not mean the Federal Reserve will get more aggressive when it comes to monetary policy.
Peter Martin, Crawford School of Public Policy, Australian National University
Asked how high an inflation rate Australia should prepare to tolerate, three of the 48 economists nominated 8% or higher. Seven expected inflation to fall without the need for further action.
Inflation has hit 6.1%, and the rate of inflation on necessities is 7.6%. Bringing it down will require still higher interest rates and exquisite judgement in order to avoid a recession.
Soaring inflation in the US has been driven in part by large increases in the price of groceries – a burden that falls disproportionately on lower-income families.
A bigger-than-expected jump in inflation means the Fed may have to get more aggressive about interest rate hikes. An obscure economic indicator suggests it has room to do so.