The US Commerce Department reported on Wednesday that inflation reached a two-year high in August. Consumer prices were up 0.4% from the previous month, a number which was largely driven by rising food and housing costs. Know the fact below about inflation in USA.
Rising Prices of Food and Housing in the US
It’s no secret that the cost of living in the United States has been on the rise in recent years. And according to the latest data, it looks like food and housing are two of the main drivers of this inflation.
According to the US Bureau of Labor Statistics, the prices of food and beverages rose by 0.4% in August, while the prices of shelter (which includes rent, utilities, and property taxes) rose by 0.3%. Together, these two categories make up a whopping 28% of the Consumer Price Index (CPI), so it’s no surprise that they’re having a significant impact on inflation.
What’s interesting is that while food and housing prices have both been rising steadily for years now, they haven’t been doing so at the same rate. In fact, over the past 12 months, food prices have actually risen at a slightly slower pace than they did last year, while shelter prices have accelerated.
So what does this all mean for inflation? Well, according to economists, we can expect it to remain relatively low in the near-term as long as food and housing costs don’t start rising too quickly. However, if we see a sustained acceleration in either of these categories
Costs have increased less than they typically have in the past
It’s been a tough few years for American consumers, as costs for food and housing have risen faster than incomes. But according to new data from the Labor Department, inflation has actually been relatively tame over the past 12 months.
In fact, prices have increased less than they typically have in the past. That’s good news for American families who are still struggling to make ends meet.
Of course, there are still some areas where prices are rising faster than others. Housing costs, for example, continue to outpace wage growth. And food prices have also been on the rise in recent months.
But on the whole, inflation is being held in check. That’s good news for American consumers and businesses alike. Let’s hope it continues!
Causes of these increases, including trade tensions, natural disasters and higher oil prices raising impact in inflation
Over the past year, prices for food and housing have increased at a faster rate than overall inflation. This is largely due to trade tensions, natural disasters and higher oil prices.
Trade tensions between the US and China have led to higher tariffs on imported goods, including food. This has caused prices for food to increase, as farmers and food producers pass on the higher costs to consumers. Natural disasters, such as hurricanes and floods, have also contributed to higher food prices by damaging crops and infrastructure. Higher oil prices have also put upward pressure on prices, as energy is a major input for transportation and production.
These factors are expected to continue to put upward pressure on prices in the near term. However, inflation is expected to moderate over the longer term as these effects dissipate.
Short-term negative effects on the economy will be outweighed by the long-term positive effects
The rising prices of food and housing held inflation in the US up in September, according to the latest data from the Labor Department. The consumer price index rose 0.3% last month, after a 0.2% increase in August. Food prices rose 0.4% in September, while housing costs increased 0.3%. Inflation has been ticking up in recent months, but it remains relatively low by historical standards. The Fed targets a 2% inflation rate.
The rising cost of living is starting to squeeze households, especially those on fixed incomes. Many workers are also seeing their wages stagnate, even as inflation eats into their purchasing power. The Fed is widely expected to raise interest rates again in December, which will only add to the financial burdens facing American consumers.
The Federal Reserve’s preferred measure of inflation, the personal consumption expenditures index, was up 1.6% in August from a year earlier. That was the biggest 12-month increase since February 2017 and followed a 1.4% rise in July.
The cost of food climbed 0.3% in August from the prior month and was up 3% from a year earlier, the biggest 12-month gain since 2011. The cost of housing and utilities rose 0.4% last month and was up 3.2% from a year earlier, the most since January 2017.
“There is little to suggest that inflation will be anywhere near as low as policymakers would like,” said Paul Ashworth, chief U.S. economist at Capital Economics Ltd. in Toronto.”
