In August, the cost of living went up, and it’s something many people expected. This might make the Federal Reserve, which manages the country’s money, think about increasing interest rates.
In August, prices for things like gasoline went up by 0.6%. This pushed the yearly increase in prices to 3.7%. The Labor Department shared this news on Wednesday.
When we look at prices without counting food and energy, they still went up by 0.3% in August and by 4.3% over the year. Both of these numbers were a bit higher than what experts thought would happen.
The report explained, “The main reason prices went up in August was because of higher gasoline prices, which made up more than half of the increase. Prices for places to live also went up for the 40th month in a row.”
Even though prices went up, experts think that inflation will start to slow down. But it might be tough to reach the 2% yearly target that the Federal Reserve has set. One reason for this is that Saudi Arabia and Russia have made a plan to produce less oil, which is making energy prices go up.
An economist named Andrew Patterson from Vanguard said, “Even though prices for goods might go down, it won’t happen very quickly. But we expect prices for services to stay about the same.”
The Federal Reserve has been increasing interest rates for some time now, but they might take a break when they meet later this month. What they’ll do in November is still uncertain.
Inflation has gone down the most for things we buy (goods), but it’s staying higher for things we do (services). Prices for places to live, especially, are still high, and the cost of energy keeps changing. People’s wages are still going up by about 4% each year, which is more than what the Federal Reserve wants to see to keep inflation under control.
The Federal Reserve is worried that high wages might lead to a situation like what happened between 1966 and 1982 when prices kept going up. Back then, people needed to earn more money just to keep up with rising prices. The Federal Reserve is watching the job market very closely to make sure this doesn’t happen again.