FAU Report: High Prices Persist Despite Cooling Inflation
Inflation may be cooling, but Americans are still living with a much higher price level than they were a year ago, according to a report from an economist at Florida Atlantic University.
Inflation may be cooling, but Americans are still living with a much higher price level than they were a year ago, according to a report from an economist at Florida Atlantic University.
The Bureau of Economic Analysis released its August update to the PCE price index, showing that consumer prices rose 0.3% from the preceding month and 3.4% from the same month one year ago. The numbers are a modest but meaningful improvement over the elevated readings earlier this summer, when the annual rate stood at 3.8% in May and 3.5% in June.
“Consumers may hear inflation is cooling but they do not necessarily feel that in their pocketbooks or purchases,” said Eric Van Tassel, Ph.D., associate professor of economics in FAU’s College of Business. “While a potential trend of downward inflation is encouraging, the cumulative effect of higher prices means the overall price level remains elevated compared with a year ago.”
FAU’s Monthly Inflation Report tracks not only the inflation rate but also compares actual price movements with previous inflation expectations and Federal Open Market Committee projections. Taken together, the report presents key inflation indicators to help consumers renegotiate existing employment, purchase, and lending contracts, or enter new ones more confidently.
Gasoline prices contributed significantly to inflation, with prices jumping 4.4%. Core inflation remains at 3%, indicating that price pressures extend beyond energy and are keeping inflation above the Fed’s 2% target.
“After several years of rising prices, families are still adjusting to a higher cost of everyday necessities like housing, food, and transportation,” Van Tassel said. “For consumers and businesses, the question is no longer simply whether inflation is coming down, but how long it will take for price growth to return to levels consistent with the Fed’s target.”
-FAU-
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