Well, hopes that the sharp drop in gas prices would bring inflation down didn’t quite pan out as much as was hoped, according to the August report from the Bureau of Labor Statistics. Inflation continued to tick up 0.1 percent for the month and 8.3 percent over the past year. The sharp decline in gas prices helped slow things a little, but was largely offset by increases in stuff like medical care and vehicle prices.
“Today’s Consumer Price Index reading is a stark reminder of the long road we have until inflation is back down to earth,” Mike Loewengart, head of model portfolio construction for Morgan Stanley’s Global Investment Office, told CNBC. “Wishful expectations that we are on a downward trajectory and the Fed will lay off the gas may have been a bit premature.”
It’s not all bad news. Average hourly earnings for American workers rose an adjusted 0.2 percent over the month, and airfare is on the decline. But inflation is stubbornly climbing, and that does mean rising costs for Americans.
Simply put, rising inflation means your dollar isn’t going to stretch as far. Sometimes, this is by design. Economists love a little inflation as a treat. But it’s kind of like salt — a little goes a long ways, and too much spoils the whole dish. Or, in this case, means consumers — especially those who make lower wages — can’t afford basic needs.
What this does mean is that a lot of us are probably rethinking our budgets. It should also mean that those of us who can afford to be generous are doing so, either with local charities on the frontlines of poverties or with our own neighbors, friends and loved ones feeling the squeeze of a fragile economy.
