News & Insights

Inflation in the U.S Economy Remains Well Above the Fed’s 2 Percent Goal; The Pain May Be Too Great to Get There

Does Financial Stability Trump the Fed’s Inflation Fight?

Inflation eased again in the latest report, with the Consumer Price Index rate of increase falling to 0.4% on a month-over-month basis, and to 6% year-over-year. Energy prices continued to moderate, while prices rose for food and services. Core CPI rose from 0.4% to 0.5%. Goods (other than used cars) were buoyed by rises in food and household furnishings, up 0.4% for the month, implying an end to the tailwind created by supply chain improvements. Services ex-shelter fell sharply from 0.6% to 0.1%, which is good news about what has been a sticky component of inflation. Real earnings suffered their biggest drop since July 2022, falling by 0.4% on a monthly basis.