{"id":60508,"date":"2023-09-13T13:04:22","date_gmt":"2023-09-13T17:04:22","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/mixed-cpi-inflation-numbers-signal-another-2023-rate-hike-is-possible\/"},"modified":"2023-09-13T13:04:25","modified_gmt":"2023-09-13T17:04:25","slug":"mixed-cpi-inflation-numbers-signal-another-2023-rate-hike-is-possible","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=60508","title":{"rendered":"Mixed CPI Inflation Numbers Signal Another 2023 Rate Hike Is Possible"},"content":{"rendered":"<div>\n<p>Consumer Price Inflation for the 12 months ending in August 2023 accelerated to 3.7% \u2014 an increase driven primarily by rising energy costs and related services. However, the Federal Reserve prefers to strip out food and energy cost. With this metric, inflation declined to 4.3%, continuing the disinflation trend in this version of the series since March 2023. That\u2019s still well above the Fed\u2019s 2% annual inflation target. The monthly inflation rate for August 2023 was 0.6% for headline inflation and 0.3% when stripping out food and energy.<\/p>\n<p>The Fed will take some encouragement from some underlying trends in the CPI report, such as continued disinflation in shelter costs. That said, the Fed may still be tempted to consider a further 2023 interest rate hike, perhaps in November, to bring inflation down to its 2% goal faster. Another CPI report is scheduled for October 12 \u2014 a few weeks before the Fed makes any decision at its November 1 meeting. The Fed\u2019s upcoming September 20 decision is largely expected to hold rates steady, both according to recent statements from Fed officials and the implicit forecast of interest rate futures.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Rising Energy Prices<\/h2>\n<p>Higher energy costs accounts for the headline inflation numbers accelerating as energy commodities rose more than 10% for the month of August. This trend likely prompted the increase in prices for energy-intensive categories such as transportation services and airline fares, too. It remains to be seen whether this trend continues for the full month of September. For now, energy costs are generally rising in September as well, though we\u2019re not yet halfway through the month. So, price trends could change.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Home Price Disinflation<\/h2>\n<p>Shelter costs continued to increase in the August CPI data, but at a slower rate than before. This will offer some comfort to the Fed. Still, this trend is largely expected based on past home price moves.<\/p>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p>Shelter costs are particularly important to CPI given the large weighting applied to this category. If this trend continues, it may help pull inflation lower. However, shelter costs typically track home prices with a lag. Here, the Fed has expressed concern that home prices, despite declining in late 2022 and early 2023, have rebounded in aggregate since the spring. So, this favorable trend that\u2019s helping bring down core inflation may not last.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Services Costs<\/h2>\n<p>Overall data on services prices in the August CPI numbers will give the Fed some concerns. Many categories are volatile month-to-month, but both medical and transportation services did increase in price compared to recent months. The Fed is monitoring this category closely and this recent month of data didn\u2019t show much disinflation, even though prior months were more encouraging.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Upcoming Fed Meetings<\/h2>\n<p>The Fed has largely ruled out a rate increase at its next decision on September 20. But an interest rate hike on November 1 remains under consideration, with the bond markets assessing the chance at almost 40%.<\/p>\n<p>The August CPI figures suggest inflation will continue to take some time to return to the Fed\u2019s 2% target. It remains to be seen how much patience the Fed has for that. Now the Fed may have to weigh the risks from a potentially weakening jobs market against its inflation fight, which could further complicate its decision.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/simonmoore\/2023\/09\/13\/mixed-august-cpi-inflation-numbers-signal-another-2023-rate-hike-is-possible\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Consumer Price Inflation for the 12 months ending in August 2023 accelerated to 3.7% \u2014 an increase driven primarily by rising energy costs and related services. However, the Federal Reserve prefers to strip out food and energy cost. With this metric, inflation declined to 4.3%, continuing the disinflation trend in this version of the series [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":60509,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-60508","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Mixed CPI Inflation Numbers Signal Another 2023 Rate Hike Is Possible | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Consumer Price Inflation for the 12 months ending in August 2023 accelerated to 3.7% \u2014 an increase driven primarily by rising energy costs and related\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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