You’ve got all the receipts.
- Food prices are ringing in higher.
- The cost of gas is rising.
- Electric bills are soaring.
Accelerating inflation has been running 2% above the annual target set by the Federal Reserve.
For some households, rising wages are keeping pace with price increases.
But to have a bigger paycheck means you’ve got to have a job.
And those numbers have been increasingly troubling this year, especially for Black Americans, older women, new college graduates, and lower-income workers.
As policymakers in D.C. prepare to debate next steps to shore up the wobbling bits of the economy, a new inflation figure emerges that could toss a curve into the next monetary policy step.
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Federal Reserve oversees inflation, jobs and interest rates
The Federal Reserve’s dual mandate from Congress requires price stability and low unemployment.
More Economic Analysis:
- Fed official sends bold 5-word message on September rate cuts
When the Fed meets September 17, many traders and economists expect it will cut the benchmark Federal Funds Rate to shore up the nation’s crumbling labor market and lower the cost of short-term borrowing.
But some experts say the inflation side of the mandate can’t be discounted.
- Lower interest rates lead to less unemployment but higher prices.
- Higher interest rates lead to lower inflation but higher employment.
The Fed meets September 17 and is widely expected to cut the current funds rate of 4.25% to 4.25% for the first time this year.
Related: JPMorgan’s Dimon issues stark recession message after jobs shock
It has held off to monitor the path of tariff inflation through the nation’s supply chain and to determine if those price increases would be a one-time bump or linger into consumers’ wallets.
The widely watched CME Group FedWatch Tool estimates a 92.1% chance of a 0.25-percentage-point rate cut next week and a 7.9% chance of a half-point cut.
The Consumer Price Index tracks household costs
The Consumer Price Index measures what households actually pay for a fixed basket of goods and services like food, gasoline and rent.
The monthly CPI report by the Bureau of Labor Statistics reflects consumer spending habits but can overstate inflation since it doesn’t account for substitutions when prices change.
The Personal Consumption Expenditures index is the Fed’s preferred inflation gauge.
It tracks what people actually spend, including healthcare costs, thus making it a more complete picture than the CPI.,
The CPI rose 2.7% year-over-year in July, while the PCE increased 2.6%.
The August CPI data will be released September 11.
August PPI comes in lower than expected
The Producer Price Index, which measures wholesale inflation, showed prices dipped 0.1% lower in August, after jumping in July.
Economists had expected a 0.3% monthly rise in the September 10 report.
Related: Mortgage rates react as bets rise on Fed interest rate cut
PPI tracks what businesses get paid for finished goods and services, offering an early signal of inflation trends before they hit shoppers.
When PPI goes up, it usually signals that business costs are rising, which can eventually lead to higher consumer prices as reflected in the CPI.
When it goes down, it suggests less price pressure in the economy.
Inflation data on the rise since April
The Trump Administration’s historic tariffs, which zigzagged across multiple deadlines and levels, were initially announced on April 2, known as “Liberation Day” around the White House.
CPI monthly numbers have been ticking upwards since.
Goldman Sachs CEO David Solomon told CNBC September 10 that tariff uncertainty and sticky inflation is “something to watch very closely.”
“The economy is chugging along,” Solomon said, adding that there was no question that the U.S. jobs market was softening.
Related: Main Street bracing for fewer jobs and higher inflation: Fed survey
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