Companies are boosting pay to find and keep employees, which is great for workers, but can lead businesses to raise prices to offset the higher labor costs. Yet Duy added that one risk posed by the steady growth is that it could keep inflation pressures high. Americans boosted their spending at restaurants and retailers in July, and hiring has remained solid. economist at SGH Macro.ĭuy said that the economy is expanding at a healthy pace, confounding long-standing fears that a recession is imminent. Wednesday’s report shows prices are sticky enough “to have another rate hike this year,” said Tim Duy, chief U.S. Gas prices spiked nearly 11%, though they have since leveled off: According to AAA, the average nationwide price at the pump was $3.85 on Wednesday, unchanged from a month ago. On a monthly basis, consumer prices jumped 0.6% in August, the biggest increase in more than a year. “The progress on core inflation over the coming months is going to be slow and it’s going to be uneven.”
“We’re getting to the stage where we’ve basically had all the low hanging fruit in terms of disinflation,” said Blerina Uruci, an economist at T. Some of the forces that pulled down prices earlier this year - such as lower gas prices and improving supply chains, which reduced the cost of goods like furniture - have largely played out, economists say. Inflation dropped to 3% in June, down from a 9.1% peak in June 2022. Wednesday’s report suggested that after inflation faded quickly over the spring and the summer, future declines will be much more gradual. Wednesday’s figures keep the prospect of another rate increase later this year on the table, however, perhaps at its November or December meetings, economists said, because core prices ticked up a bit faster in August than in July. The Fed is widely expected to skip an interest rate hike at its meeting next week.
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