by Daniel Johnson
July 15, 2024
The price of everyday goods like gasoline, rent, and groceries fell.
American consumers received one of the strongest signs yet that the inflation that has consumed their wallets may finally be cooling. The best sign for consumers is arguably in the metric for the average price of a used car, which fell 10% since June 2023 and 1.5% since June 2024.
According to Yahoo, everyday goods like gasoline, rent, and groceries also fell 0.1% in June. The price of cell phones has decreased by 10% year over year and the price of TVs dropped by 6% and smart home devices dropped by 4% as did health insurance costs over the same span.
However, there seems to be no relief in sight for auto insurance, which is currently the most expensive it has been in nearly 50 years. Insurers have justified this steep raise in the cost of insurance by citing the record number of claims and expenses paid out versus a deficit of premium paid.
Some grocery items have cooled off, namely ham, potatoes, rice, and apples. Others, like frozen juices, drinks, and beef products remain more expensive. Likewise, it is still more expensive to eat out, a cost which went up by 4% since July 2024.
These percentages highlighted by the Consumer Price Index indicate that this is the slowest annual gain in prices overall since 2021, and although inflation has steadily fallen from its high point of 9.1%, it hasn’t yet hit the 2% threshold that the Fed has targeted. Some believe that by the end of July, a Federal Reserve rate cut could be on the table when central bankers meet.
Absent that rate cut speculation, it is more broadly expected that the Fed will approve an interest cut when the organization meets in September. According to CBS News, Fed Chair Jerome Powell’s comments to the Senate Banking Committee on July 9, part of his semi-annual update, suggested that if the data continues to be positive, a rate cut could come soon.
“The most recent inflation readings, though, have shown some modest further progress,” Powell told the Senate committee, “and more good data would strengthen our confidence that inflation is moving sustainably toward 2%.”
Powell also said that economic indicators suggest “that conditions have returned to about where they stood on the eve of the pandemic: strong, but not overheated,” and he intimated that the next “likely direction seems to be….that we loosen policy at the right moment,” before saying that he did not believe that the Fed would increase rates.
Powell has long advocated for an independent Fed and often faced attacks from then-President Donald Trump for raising interest rates. Trump, in anticipation of another term in office, has already said that he would not nominate Powell if he becomes president once more.
Powell still believes in the necessity of a Fed that is independent of the political whims of political parties and their leaders, as he told CBS News, “It’s actually essentially, literally essential. The good news is I think that is broadly understood on both sides of the aisle. We need to do our work in a way that’s outside the political process.”
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