Inflation turned higher to start 2023, as rising shelter, gas and fuel prices took their toll on consumers, the Labor Department reported in March. While the Federal Reserve hopes to be ending their interest rate hikes in the coming future, the latest personal consumption expenditure (PCE) index from the Bureau of Economic Analysis—the Federal Reserve’s favored measure of inflation—demonstrates that inflation still persists.
After the sudden demise of two major banks in the last few days, a moderate decrease in CPI—from 6.4% to 6.0%—might not be a major factor in the next big policy decision by the Federal Reserve, with urgent concerns about whether a broader run on banks could swiftly cripple the U.S. economy.
In inflation news, the Fed recently announced another rate hike, although more modest in nature than other recent hikes, to assist in their goal that began last March to reel in inflation. Following the announcement, a statement from officials hinted at the end of rate hikes soon.
The Fed has aggressively raised its benchmark interest rate in the past year to its highest level in 15 years in its drive to get rampaging inflation under control. The Fed’s goal is to slow borrowing and spending, cool the pace of hiring and relieve the pressure many businesses feel to raise wages to find or keep workers. Businesses typically pass their higher labour costs on to their customers in the form of higher prices, thereby helping raise inflation.
Behind much of the surge in core prices were rents and other housing costs. Rents jumped 0.7 percent in January, only slightly below December’s 0.8 percent rise. Housing costs have a significant effect on inflation, because they make up nearly four-tenths of the core consumer price measure.
The annual inflation rate for the United States was 6.0% for the 12 months ended February, following a rise of 6.4% in the previous period, according to U.S. Labor Department data published March 14, 2023. The next inflation update is scheduled for release on April 12 at 8:30 a.m. ET, and it will provide information on the rate of inflation over the 12 months ended March 2023.
Here is a chart and table displaying annual US inflation rates for calendar years from 2000 and 2013 to 2023. For inflation rates in prior years, please refer to historical inflation rates. If you would like to calculate the accumulated rates between two different dates, you can use the US Inflation Calculator.
HOME PRICES HAVE EXCEEDED INFLATION
Home prices have risen at a significantly higher rate than inflation since 2020, 42% compared to 14%, according to a new report from Clever.
Clever’s new report analyzed how inflation and home prices have increased over the decades, honing in 2020 vs. 2022. The report found that the median home price has risen from $329,000 in 2020 to $468,000 in 2022, while the price of goods rose from $3 to $3.48.
Major takeaway:
“The value of homes has increased exponentially over the past three years as demand outpaced supply. As a result, homeowners were in a great position to gain equity as prices inflated over time,” said Sam Huisache, a content writer for Clever and author of the report. “However, inflation has also made it difficult for potential buyers to afford homeownership as lenders have increased mortgage rates and tightened lending standards. As of date, the average national mortgage rate is 6.97%—compared to 3.58% in March 2021.”
“For the past few months, American home prices have steadily declined. Despite inflation finally cooling, Americans are still stressed about their finances. We’ve found that 73% of Americans experience stress and anxiety over money,” continued Huisache. “Recognizing that average Americans can do very little to influence their cost of living, it is more important than ever to understand the relationship between inflation and home prices.”
DATA RESOURCES: https://www.cnbc.com/2023/02/14/consumer-price-index-january-2023-.html, https://www.aljazeera.com/economy/2023/2/14/us-inflation-slows-to-6-4-but-price-pressures-remain, https://www.usinflationcalculator.com/inflation/current-inflation-rates/, https://www.usatoday.com/story/money/economy/2023/02/14/cpi-january-inflation-data-today-live-updates/11247836002/, https://www.rismedia.com/2023/03/14/inflation-sinks-again-focus-now-banks/, https://www.rismedia.com/2023/03/31/core-inflation-still-persists/, https://www.rismedia.com/2023/03/31/homes-prices-have-exceeded-inflation/
