Consumer prices in August were up 2.5% from a year ago — the smallest annual increase since February 2021. Falling inflation clears the way for the Federal Reserve to start cutting interest rates next week — likely by a quarter percentage point.
Inflation fell to its lowest level in 3-and-a-half years in August, clearing the way for the Federal Reserve to start cutting interest rates next week.
Consumer prices in August were up 2.5% from a year ago, according to a report from the Labor Department Wednesday. That’s the smallest annual increase since February 2021.
Here are four things to know about the cost of living report.
Housing costs have been the biggest driver of inflation in the last year, rising 5.2%. Gasoline prices, on the other hand, have plunged more than 10%.
Overall, the price of goods has fallen nearly 2% in the last twelve months, led by a sharp drop in the price of used cars and trucks. The cost of services such as haircuts and car repair continues to climb, however.
One of the places shoppers feel the sting of inflation most is at the supermarket. People buy groceries every week, so it’s a regular reminder that milk and eggs cost more than they used to. But after climbing sharply in 2022 and 2023, grocery prices have mostly leveled off. They rose less than 1% in the last twelve months and were unchanged between July and August.
Federal Reserve governor Chris Waller understands that’s little comfort for people who want to see lower prices at the supermarket.
