Despite the expected inflation drop, she said investors anticipate the Fed will keep interest rates steady and not cut them anytime soon. Saira Malik, chief investment officer at Nuveen, told CNN that financial markets, like the Fed, are more focused on core inflation and have already priced in a pickup in headline inflation. She added that the expected cooling of both the job market and the broader economy could help ease inflation in the services sector, which encompasses services provided at businesses such as restaurants and hospitals.Ī recent San Francisco Fed paper argues that shelter inflation could turn negative in the second half of 2024, helping both headline and core inflation tick down. We’re seeing rents for single-family homes also moderate pretty extensively, and so as that starts to show in the official measures of inflation, we think that there’s a lot more weakness to come out of that sector,” said Sarah House, senior economist at Wells Fargo. “We’ve seen rental costs decelerate pretty sharply over the past year. It was the smallest gain since January 2022. Those costs rose 0.3% in August from the prior month. Shelter costs, which make up a big chunk of the CPI, are also poised to slow in the coming months. However, the United Auto Workers’ ongoing strike could throw a wrench into that expected slowdown in vehicle prices if inventories dwindle due to slower production. Prices of new cars rose a tepid 0.3% in August from the prior month, after declining 0.1% in July and staying flat in June. Prices of used cars and trucks declined for the third straight month in August, falling 1.2% that month from July, and were 6.6% lower in August than the same month a year ago. “High interest rates are really dampening demand in the automobile category, and also reduced credit availability has made it to where that sector is just tough for consumers to make purchases in.” “Right now, we’re seeing some weakening price momentum in goods overall, particularly used cars, but we’re also seeing new vehicle (prices) slow down, and we think that prices will continue to come down into year-end,” José Torres, senior economist at Interactive Brokers, told CNN. Together, the data is leading economists to predict that inflation will continue its slowdown in the months ahead. Oil prices hit 10-month high after Libya flood catastrophe (Photo by LOIC VENANCE / AFP) (Photo by LOIC VENANCE/AFP via Getty Images) Loic Venance/AFP/Getty Images The Donges refinery is the second largest refinery in France. A Total Energies employee walks in the Donges oil refinery in Donges, western France, on September 8, 2023.
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