Recent data indicates that price increases in the United States have eased in recent months, providing a welcome respite for consumers. Those hopes were dashed somewhat last week, when reports indicated that the Consumer Price Index (CPI) increased by 3% in September. The rate of inflation is coming down faster than economists predicted.
Specifically, prices for basic necessities have actually gone down. Among the biggest drivers were a big drop in hotel prices, a decline in the price of milk and a decline in other apparel. This price drop matches a general pattern shown throughout November, with stores rolling out sales to entice shoppers.
Once again the US government shutdown made collecting data for the CPI report very problematic, delaying its release. Even before COVID struck, this shutdown added insult to injury for Americans, many of whom have suffered through a decade of inflation. The heat on US President Donald Trump has been turned up as Americans start to raise hell about rising inflation.
In spite of these challenges, economists are cautiously optimistic about what lies ahead. Some suggest that the slowing pace of price increases could lead the US central bank to consider further cuts to interest rates.
“All told this is a positive report, that comes with an asterisk.” – An unnamed economist
Analysts predict that upcoming CPI releases will smooth out any statistical anomalies in the data. They hope that this will lead to a much clearer picture down the line.
“Subsequent CPI’s will likely smooth out the statistical errors that might have been present in today’s report.” – Another unnamed analyst