Here Are The Areas That Are Costing You More As Inflation Persists - Tucker
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Here Are The Areas That Are Costing You More As Inflation Persists

Year-over-year inflation declined last month; however, the price of many products are still on the rise and many regular costs for households are still increasing.

A Thursday report from the Bureau of Labor Statistics revealed that price levels rose 7.7% between October 2021 and October 2022. This new report indicates that rampant inflation costs have begun to slow while the Federal Reserve takes contractionary policy. The month-to-month increase of 0.4% was below analysts’ forecasts, while the 0.3% increase in core inflation was also lower than expected. However, that measurement factors out food and energy, both more volatile categories.

While the headline numbers decreased, those numbers are driven by declines in areas such as used vehicles, clothing and medical care. These all have lower day-to-day impacts on consumers. Meanwhile, overall food prices rose 0.6% while energy prices rose 1.8%, the first such increase since June. Shelter costs rose 0.8%, marking their fastest increase since the beginning of the year.

“The pervasiveness of price increases remains problematic,” Bankrate Chief Financial Analyst Greg McBride said in a statement. “In categories that are necessities — shelter, food, and energy — we continue to see large and consistent increases. The areas posting declines are for the most part either irregular or more discretionary in nature — airfare, used cars, and apparel.”

The new report caused markets to rally on Thursday with Dow Jones rising 1,036 points, or 3.2%, and the S&P 500 rising 176 points, or 4.7%. McBride pointed out that, if this news is what “constitutes improvement,” then market actors have “set a very low bar.”

“Any meaningful relief for household budgets is still somewhere over the horizon,” he continued. “Inflation has run far hotter for far longer than expected and we have yet to string together any kind of winning streak … there is plenty of opportunity for further disappointment.”

This decrease in year-over-year inflation also occurred just before the Federal Reserve raised the target federal funds rate by 0.75% for the fourth consecutive time, the most aggressive contractionary monetary policy efforts in decades.

Some economists have argued that central bankers may be overreacting as they attempt to combat inflation, reacting to the lockdown-induced recession through which policymakers maintained near-zero interest rates and purchased government bonds from the markets.

President Joe Biden also lauded the lower headline inflation reading, claiming that the report “shows a much-needed break” in rising price levels. “Today’s report shows that we are making progress on bringing inflation down, without giving up all of the progress we have made on economic growth and job creation,” he said in a statement from the White House. “My economic plan is showing results, and the American people can see that we are facing global economic challenges from a position of strength.”

Biden made no comment on rising energy costs and downplayed the high prices for groceries, saying that the report, “shows a much-needed break in inflation at the grocery store as we head into the holidays.”

After the midterm elections, which were lauded as a coming “red wave” by many conservative voices, failed to deliver a dominant performance from Republicans, many projections show that Republicans are expected to take a slim majority in the House of Representatives, with the fate of Senate control still up in the air. Biden told lawmakers that he will “oppose any effort” to undo his agenda.

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