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<ul class="summary-list"><li>Inflation accelerated as expected in October.</li><li>The consumer price index increased 2.6% from October 2023, matching the forecast.</li></ul>As expected by economic forecasters, inflation heated up in October.The consumer price index sped up as expected to a 2.6% year-over-year growth rate in October from <a target="_blank" class="" href="https://www.businessinsider.com/inflation-september-cpi-consumer-price-index-federal-reserve-interest-rates-2024-10">September's rate of 2.4%</a>.Inflation had been cooling down for most of 2024. Before the latest reading, the last uptick in the headline year-over-year rate was in March.Core CPI, which excludes volatile food and energy prices, rose 3.3% in October from a year ago, matching the forecast and the previous year-over-year increase.The Federal Reserve will likely want to see signs of inflation continuing to come down to its 2% target as Federal Open Market Committee members decide whether to continue cutting interest rates. There are still a lot of data releases to come out before the year's final scheduled FOMC meeting in December, including further reports for inflation measures like the CPI.The Fed decided in its November meeting to <a target="_blank" class="" href="https://www.businessinsider.com/federal-reserve-cuts-interest-rates-quarter-point-powell-inflation-election-2024-11">cut interest rates by 25 basis points</a>, which was largely expected and smaller than <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">September's 50-basis-point cut</a>.Before the latest CPI report, <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">CME FedWatch</a> showed investors were assigning around a 60% probability to a 25-basis-point cut in December. After the CPI news release, that increased to around 70%.November's jobs report, to be published in early December, will also help Americans and the Fed better understand the labor market in the fall after employment readings in <a target="_blank" class="" href="https://www.businessinsider.com/october-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-11">October</a> were surprisingly weak amid hurricanes and strikes."We're trying to be on a middle path where we can maintain the strength in the labor market while also enabling further progress on inflation," Fed chair Jerome Powell said at a press conference on November 7.This is a developing story. Please check back for updates.

Inflation heated up in October as expected

<ul class="summary-list"><li>President-elect Donald Trump said he would implement tariffs on imported goods.</li><li>Economists said the proposals could boost inflation and raise prices for consumers.</li></ul>One of the first policies President-elect <a target="_blank" class="" href="https://www.businessinsider.com/election-results-trump-harris-presidential-election-2024-11">Donald Trump</a> is expected to enact after being sworn into office is imposing <a target="_blank" class="" href="https://www.businessinsider.com/cost-expensive-goods-price-impact-presidential-election-scenarios-trump-harris-2024-10#imported-goods">taxes on imported goods</a>.Many economists say these tariffs, as well as some of his other proposals, could kick-start another bout of inflation and interest-rate hikes.Trump has said that his proposals would not impact US prices. "I am going to put tariffs on other countries coming into our country, and that has nothing to do with taxes to us. That is a tax on another country," he said in an August speech.Some experts have argued <a target="_blank" class="" href="https://www.businessinsider.com/trump-tax-plan-tarriffs-benefits-top-earners-study-2024-10">otherwise</a>. Economists and investors project that taxes imposed on imports will be passed on to American consumers in the form of higher prices. In an economic chain reaction, households would then pay higher interest rates on borrowing of all kinds as the Fed moves to tame that newly rekindled inflation.<h2 id="28eee089-e5e3-42d1-bc61-18122840af26">Ramping up tariffs from Trump's first term is expected to eat into Americans' wallets</h2>On the campaign trail, one of Trump's cornerstone proposals was a 60% <a target="_blank" class="" href="https://www.businessinsider.com/where-does-trump-vance-stand-on-china-tariffs-inflation-taxes-2024-7">tariff</a> on goods imported from China and a 10% to 20% tariff on imports from other countries.The US Census Bureau reported that broad tariffs would likely affect the prices of automobiles, drugs for human and veterinary use, food and beverages, furniture, and household appliances.Trump could announce these changes as soon as he takes office because they would not require congressional approval, but because implementation could take time, consumers would not see higher prices immediately.An <a target="_blank" class="" href="https://www.piie.com/sites/default/files/2024-09/wp24-20.pdf">analysis</a> from the nonpartisan Peterson Institute examined Trump's proposed 60% tariff on goods imported from China and estimated that it would boost inflation by 0.4 percentage points in 2025. The estimate does not include Trump's proposal for a 10% to 20% tariff on other imports.Markets are also <a target="_blank" class="" href="https://markets.businessinsider.com/news/bonds/surging-treasury-yields-after-trump-win-show-borrowers-may-not-get-relief-2024-11">expecting higher inflation</a> under Trump; bond yields surged following Trump's victory. That led to the 30-year fixed mortgage rate rising, meaning homebuyers are on track to see higher interest rates on loans.An <a target="_blank" class="" href="https://taxpolicycenter.org/taxvox/tpc-trump-tariffs-would-raise-household-taxes-and-slow-imports">analysis</a> by the nonpartisan Tax Policy Center found that Trump's policies would decrease posttax incomes by an average of $1,800 in 2025. A separate <a target="_blank" class="" href="https://www.americanprogressaction.org/article/trumps-tariff-would-cost-the-typical-american-household-roughly-1500-each-year/">analysis</a> by the left-leaning Center for American Progress said that his tariff plans could cost the typical American household an extra $1,500 a year.Tariffs are typically used to raise government revenue and bolster domestic manufacturing. Trump enacted them in his first term as part of his "America First" policies, including a 25% tariff on Chinese goods that ultimately <a target="_blank" rel="" class="" href="https://www.businessinsider.com/trump-tariff-trade-war-risk-china-exports-great-depression-economy-2024-5">led to a trade war</a> between the two economies. While they did not significantly impact inflation, they did raise taxes for consumers. The Tax Foundation <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://www.businessinsider.com/where-does-trump-vance-stand-on-china-tariffs-inflation-taxes-2024-7">estimated</a> that Trump's tariffs during his first term amounted to a nearly $80 billion tax increase on Americans buying Chinese imports.Trump's win is also expected to influence the Federal Reserve's upcoming decisions on interest rates. While it's too soon for the Fed to make any adjustments since Trump has not yet implemented any tariffs, members of the Federal Open Market Committee will likely begin discussing how Trump's future economic policies could affect consumers — including whether the central bank would need to hike interest rates in the future in response to inflationary pressure.The Fed is expected to <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-federal-reserve-election-jerome-powell-inflation-jobs-2024-11">cut interest rates by 25 basis points</a> on Thursday, and Fed chair Jerome Powell will likely offer some insight into the Fed's direction following Trump's victory.However, the future of the Federal Reserve <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cut-trump-fed-powell-reaction-independence-history-2024-9">is uncertain under Trump</a>. The president-elect has previously suggested that he would like to have a say over interest-rate decisions, something presidents do not currently have. This raises the question of whether the central bank would continue to remain politically independent.Americans will likely learn more about what to expect from Trump as the year comes to a close. While Trump has maintained that his policies will help the economy and leave Americans better off, the Nobel Prize-winning economist Joseph Stiglitz <a target="_blank" class="" href="https://www.businessinsider.com/trump-presidency-policies-inflation-economy-americans-joseph-stiglitz-letter-2024-6">previously told Business Insider</a> that the "general consensus" among experts is that "the Trump administration would be more inflationary.""The broad assessment of the consequences of that is that the Fed would be forced to raise interest rates, and all that combined would still serve to increase inflation even as unemployment increased and GDP slowed," he said.

Get ready for inflation and interest rates to rise again

India's retail inflation is projected to surge to 6.15% in October, exceeding the Reserve Bank of India's (RBI) tolerance threshold of 6%, according to a new report by Union Bank of India. The spike is attributed to persistent <keyword id="21013592" type="General" weightage="20" keywordseo="food-price-pressures" source="keywords">food price pressures</keyword> and the waning of favorable base effects from the previous year. Earlier this month, RBI governor Shaktikanta Das also echoed similar sentiments and noted that the inflation print for October 2024 could stay well above 5.5%. This is why, as Das highlighted, cutting interest rates as early as December would be very early and premature The <keyword id="19999655" type="General" weightage="20" keywordseo="Consumer-Price-Index" source="keywords">Consumer Price Index</keyword> (CPI) data for October, which will be released at 4 pm on Tuesday, as opposed to the previous practice of releasing this data at 5:30 pm on the 12th of every month, follows September's inflation reading of 5.49%, up from 3.65% in August 2024. The last time inflation breached the RBI's upper limit was in August 2023. Despite the RBI's anticipation of an October inflation "hump," the Union Bank report suggests that the magnitude of the increase might raise concerns, particularly as November's figures are also tracking at elevated levels. The bank maintains its forecast of unchanged interest rates in December's monetary policy meeting, with a modest 50 basis points rate cut cycle predicted to begin in February 2025. Food inflation remains a key driver of price pressures, with vegetables and edible oils leading the recent surge. In September 2024, India's YoY food inflation rate hit 9.24%, up from 5.66% in the month prior. However, the report projects some easing of food inflation in the January-March quarter, citing typical winter price moderation and improving prospects for rabi crops. Despite this, potential risks from food supply disruptions, imported edible oil prices, and the impact of potential trade tariff hikes will exist. The RBI, which aims to maintain retail inflation at 4%, has held the repo rate steady at 6.5% for the tenth consecutive time in its last meeting as part of its inflation containment strategy. A recent SBI report also noted that expecting rate cuts in this quarter would be immature, and easing was possible only during the first half of 2025. "Given the current estimates of FY25 real GDP growth at 7.2% and CPI at 4.50%, the RBI would quite possibly keep policy rates stable over the coming quarter at least. Emerging trends in the growth outlook would possibly determine the timing and extent of any policy easing. With near-term CPI numbers likely to stay elevated, it’s premature to consider expectations of any easing in the December review. "However, high-frequency data do validate a softness in growth data on an incremental basis. Given the anticipated aligning of CPI closer to the target over H2, a shallow easing, if any can be a reasonable possibility over H1 of CY 25", it added.

Retail inflation expected to breach 6% mark in October, says UBI Report

<ul class="summary-list"><li>Russia's economy faces stress as high interest rates fail to control inflation.</li><li>Inflation hits 9.8% in September, with prices of food staples surging this year.</li></ul>Russia's economy has defied doomsday predictions more than 32 months into its full-scale invasion of Ukraine.But Russia's <a target="_blank" href="https://www.businessinsider.com/russian-economy-overheating-consumer-spending-tourism-central-bank-interest-rate-2024-7">red-hot wartime economy</a> comes with a price: inflation, which hit <a target="_blank" class="" href="https://www.cbr.ru/eng/press/keypr/">9.8% in September.</a>The price hikes are trickling down to basic food items, with prices of potatoes — a Russian staple — surging this year by 64% as of November 5, according to <a target="_blank" class="" href="https://rosstat.gov.ru/storage/mediabank/172_08-11-2024.html">official statistics.</a>Potatoes' price surge stems from bad weather and the rising cost of production amid a <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-ukraine-war-worker-shortage-population-brain-drain-2024-8">labor shortage</a> and rising wages.It's not just potatoes. The data from Rosstat, Russia's federal statistics service, show that food prices have generally risen across the board this year.In late October, economists on the <a target="_blank" rel=" nofollow" class="" href="https://t.me/russianmacro/20015">MMI Telegram channel</a>, a Russian discussion group, called the acceleration in prices "frightening."The situation is so bad that people are stealing butter from supermarkets. <a target="_blank" class="" href="https://www.businessinsider.com/russia-ukraine-war-butter-prices-soar-vladimir-putin-2024-11">Butter prices</a> have risen by 27.5% this year.Inflation has also hit a range of processed goods in recent months, including bread, dairy, chocolate, and beer, <a target="_blank" class="" href="https://www.themoscowtimes.com/2024/08/15/russian-food-suppliers-warn-of-price-hikes-up-to-40-a86026">Russian media</a> reported.The pre-Christmas surge in food prices isn't new.Last year, <a target="_blank" class="" href="https://www.businessinsider.com/putin-apologizes-for-egg-prices-as-russian-inflation-soars-2023-12">Russian President Vladimir Putin</a> had to apologize for a jump in egg prices.To tame prices, Russia's<a target="_blank" class="" href="https://www.cbr.ru/eng/press/keypr/"> central bank</a> has hiked its key interest rate to a <a target="_blank" rel=" nofollow" class="" href="https://apnews.com/article/russia-interest-rates-0fa1d7385be622fd98756a5b4e715262">record high</a> of 21% last month. <a target="_blank" class="" href="https://www.cbr.ru/dkp/mp_dec/decision_key_rate/summary_key_rate_06112024/">It said last week</a> that it could hike its key rate again at its next meeting in December.High interest rates are irritating business leaders, who are more loudly critiquing the central bank's policies.Sergei Chemezov, the CEO of the defense conglomerate Rostec, said in an <a target="_blank" class="" href="https://www.businessinsider.com/russias-defense-sector-on-overdrive-but-firms-warn-of-collapse-2024-11">address</a> to Russian senators in late October that "record" interest rates were "eating up" profits.Chemezov further warned that the high borrowing rates would eventually bankrupt most enterprises.Last week, officials and business leaders at an <a target="_blank" class="" href="https://www.businessinsider.com/russia-economic-experts-forecast-bumpy-2025-for-country-inflation-putin-2024-11">economic forum in central Russia</a> expressed pessimism about the country's economy next year. They predict lower-than-expected growth and investment delays due to the central bank's rate hike and a lack of state funding.

Russia's inflation is so bad that potatoes cost 64% more than they did at the start of the year

<ul class="summary-list"><li><keyword id="19935006" type="General" weightage="100" keywordseo="Guyana" source="keywords">Guyana</keyword>, the tiny South American nation, plans to give $500 to every citizen aged 18 and over.</li><li>Its president said the <keyword id="21044249" type="General" weightage="20" keywordseo="cash-payments" source="keywords">cash payments</keyword> aim to narrow disparities and help with higher living costs.</li></ul>The world's fastest-growing economy is giving the equivalent of $500 to each of its adult citizens as it works to share its newfound oil wealth and soften the sting of higher living costs. President <keyword id="21170274" type="General" weightage="20" keywordseo="Mohamed-Irfaan-Ali" source="keywords">Mohamed Irfaan Ali</keyword> of Guyana, the South American country with just 800,000 people, announced the move last week and said his government would begin distributing the cash immediately. He previously said each household would receive the Guyanese-dollar equivalent of $1,000, but switched to an individual payment after locals raised concerns about how a household would be defined and how the money would be shared within each home. "This is how we are promoting prosperity, ownership, distribution of wealth," Ali said. "This is how the resources and revenue of this country are being spent every single day to lift the lives of people, to expand national wealth, coastal wealth, and community wealth." Guyanese authorities have taken other steps to combat the rising cost of living, the post noted. They've removed more than 200 taxes and fees, including the excise tax on fuel and VAT on water, electricity, and some basic foods. They also gave a one-time, tax-free grant worth about $120 a person to a group that included teachers and public servants last year. Nicolas Suarez, a senior economist at S&amp;P Global Market Intelligence who covers Latin America, told Business Insider the original plan would "increase the average household's disposable income, alleviating some budget constraints." He estimated the initial program's scale at 1.5% of national GDP and 7.9% of Guyana's Natural Resource Fund, which officials set up in 2019 to prudently manage the country's oil revenues. The scale of the updated plan is less clear. World Health Organization data suggests there are about 711,000 Guyanese aged 15 and over, so if we assume the 18+ population is 660,000 people and all of them receive $500 each, the program could cost $330 million —not far off the government's estimate of $290 million for the original household payout. "In the short term, this measure could boost private consumption growth, but it may not ease <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword>ary pressures," Suarez said about the previous plan. "On the contrary, higher government expenditures could lead to significant inflationary pressures over the next 12 months." He noted that inflation in Guyana has climbed from a pre-pandemic average of 2.3% a year to 3.3% in August. He noted that <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-inflation">inflation</a> in Guyana has climbed from a pre-pandemic average of 2.3% a year to 3.3% in August. <h2>Riding an oil wave</h2>Guyana, an English-speaking former colony that gained independence from Britain in 1966, borders Venezuela to the west, Brazil to the south, and Suriname to the east. Its natural resource fund is similar to <a target="_blank" class="" href="https://www.businessinsider.com/norway-sovereign-wealth-fund-to-dump-russian-assets-ukraine-invasion-2022-2">Norway's oil fund</a>, set up in the 1990s to invest profits from the Scandinavian nation's oil-and-gas sector, protect the economy from fluctuations in energy revenues, and serve as a financial reserve and long-term savings plan for Norwegians. Norway's gas-powered sovereign wealth fund has helped to make it one of the world's wealthiest countries with an estimated population of 5.5 million and a GDP per capita of about $88,000 last year, according to World Bank data. Its oil fund held over $1.7 trillion of assets at the end of June, or more than $300,000 per Norwegian citizen. <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/warren-buffett-chevron-hess-guyana-oil-economy-berkshire-hathaway-stock-2023-10">Exxon</a>, which has discovered an estimated <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/oil-market-outlook-opec-price-cuts-us-crude-production-guyana-2023-12">11 billion barrels of oil equivalent</a> off Guyana's coastsince 2015, forecasts the country will produce about 1.3 million barrels a day once the company's six projects are online in 2027. That amount rivals Qatar's current output and would rank Guyana among the world's 20 largest oil producers. Guyana ramped up production to more than 600,000 barrels a day earlier this year, fueling roughly 50% <a target="_blank" class="" href="https://www.businessinsider.com/oil-market-guyana-economy-crude-production-outlook-opec-price-cuts-2023-12">GDP growth</a> in the first half and putting Guyana on track to grow about 43% this year, Ali said in an August webcast. Real GDP soared by about 62% in 2022 then 33% in 2023, while GDP per capita has surged from $7,000 in 2020 to around $26,000 this year, International Monetary Fund data shows. <h2>Sharing the wealth</h2>Guyana's payment to its people "sounds like great news," Karl Widerquist, a philosophy professor at Georgetown University-Qatar and the author of several books about universal basic income (UBI) told BI. He described the one-time distribution as "basic capital" or a "stakeholder grant" instead of a basic income, but said "it's a big step in that direction if they go through with it." UBI typically refers to a recurring cash payment made to every individual in a society regardless of their wealth, with no restrictions on <a target="_blank" class="" href="https://www.businessinsider.com/how-people-spend-universal-basic-income-ubi-food-housing-transportation-2024-4">how the money is spent</a> and no requirement to pay it back. Proponents hail it as a safety net against poverty that relieves financial strain and frees people to change jobs, start businesses, and weather periods of bad luck without stressing about paying their bills. Guyana's one-off, unconditional cash grant is a "positive step," Cleo Goodman, the basic income lead at the Autonomy Institute think tank, told BI. "This is a welcome injection of cash for citizens." However, she noted a guaranteed, regular income would be a "much more comprehensive commitment to redistributing this newfound wealth." Guyana was colonized by the Netherlands before Britain gained control in the late 18th century. The nation, which shares borders with Venezuela, Brazil and Suriname, became independent in 1966. Correction: October 18, 2024 — An earlier version of this story mistakenly reported an outdated version of the policy. Guyana announced Wednesday it had decided to give the equivalent of $500 to every adult, rather than a higher amount to each household as previously planned. The story also misstated the value of the previously announced figure in US dollars. It was $1,000 a household, not $2,000.

This tiny country says it will give $500 to every adult as an Exxon oil boom supercharges its economy

<ul class="summary-list"><li><keyword id="20335345" type="General" weightage="20" keywordseo="McDonalds" source="keywords" meta.keywordsubtype="org" meta.entityname="McDonald's" meta.hostid="261" meta.entityid="McDonald's">McDonald's</keyword> global sales fell for the second consecutive quarter, down 1.5%.</li><li>Fast-food chains have faced challenges from <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">food inflation</keyword>, affecting <keyword id="20139791" type="General" weightage="20" keywordseo="consumer-spending" source="keywords">consumer spending</keyword> habits.</li></ul>Global sales at McDonald's have fallen for a second consecutive quarter as the fast-food chain struggled in international markets, especially France, the UK, China, and the Middle East. Sales were down 1.5% in its third quarter, following from a 1% slide in the previous quarter, ending June 30. Comparable sales in the US were virtually flat, up 0.3% from the same period in 2023, while sales in international markets dropped 2.1%. Sales in licensed international markets fell 3.5%. "We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending," McDonald's CEO Chris Kempczinski said in the earnings release. While sales dropped, <a target="_blank" class="" href="https://www.businessinsider.com/trying-most-expensive-mcdonalds-switzerland-disappointing-fries-best-burger-2023-12">the Golden Arches</a>' revenue increased 3% to $6.9 billion, beating the $6.82 billion figure that was the consensus of analysts. Net income declined 3%, down to $2.26 billion, down from $2.32 billion in the last quarter. Shares in McDonald's fell 2.7% in premarket trade after the results were announced. Fast-food restaurants have struggled with food inflation since the COVID-19 pandemic. The most recent <a target="_blank" class="" href="https://www.bls.gov/news.release/cpi.nr0.htm">US consumer price index</a>, released in early October, showed that the cost of food away from home rose 4% in the prior 12 months, significantly higher than gains in both grocery store prices and the overall CPI. Chains, including McDonald's, have responded to the soaring cost of ingredients and labor by raising menu prices. Consumers have felt the strain of rising costs. Analysts have said that some consumers are <a target="_blank" class="" href="https://www.businessinsider.com/why-fast-food-is-so-much-more-expensive-value-affordable-2024-4">comparing the rising cost of fast food to the slowing rate of grocery inflation</a> and choosing to cook more often at home instead of eating out. Lower-income customers have particularly felt the pinch. "The decline in comparable sales signals that consumers continue to retrench from eating out," Neil Saunders, managing director of GlobalData's US retail and consumer division, told Business Insider. "Negative comparable sales and higher costs have also put some pressure on the bottom line where both operating and net income are down," he said. It's uncertain how the <a href="https://www.businessinsider.com/mcdonalds-e-coli-outbreak-cases-rise-75-people-2024-10" target="_blank">recent E. </a><a href="https://www.businessinsider.com/mcdonalds-e-coli-outbreak-cases-rise-75-people-2024-10" target="_blank">coli outbreak</a> in several states might affect McDonald's fourth-quarter results. One person died, and at least 75 were sickened. The Food and Drug Administration has said that the slivered onions on affected <a href="https://www.businessinsider.com/mcdonalds-quarter-pounder-ecoli-outbreak-why-important-sales-2024-10" target="_blank">Quarter Pounder burgers</a> were "a likely source of contamination," and the supplier of the topping <a href="https://www.businessinsider.com/mcdonalds-supplier-taylor-farms-recalls-onions-amid-e-coli-outbreak-2024-10" target="_blank">has issued a recall</a>. Correction: October 29, 2024 — An earlier version of this story overstated what has been confirmed about the recent <keyword id="22099782" type="General" weightage="20" keywordseo="E-coli-outbreak" source="keywords">E. coli outbreak</keyword> linked to McDonald's. The FDA is still investigating the outbreak and has not conclusively settled on a cause, though it has said slivered onions from one of the chain's suppliers were "a likely source of contamination."

McDonald's sales dropped for the 2nd quarter in a row as customers keep tightening their belts

<ul class="summary-list"><li>Kamala Harris unveiled plans for the first-ever federal ban on price gouging.</li><li>Some experts question whether price gouging has been a central factor in inflation's rise.</li></ul>Vice President Kamala Harris' proposal to combat grocery inflation hasn't elicited a range of opinions from economists, and many have turned to history to dispute her idea.Last week, the Democratic presidential nominee unveiled early details of her economic platform, which included a <a target="_blank" href="https://www.businessinsider.com/grocery-costs-inflation-kamala-harris-ban-price-gouging-election-trump-2024-8">pledge to ban grocery price gouging</a>. Price gouging skepticismThe plan has elicited a range of responses from experts and economists, with some deriding it as an unnecessary overstep by the government to address a problem that is not at the heart of the inflation dilemma. "I hope she walks this one back. She had some good ideas, some mixed ideas," Harvard professor Kenneth Rogoff told <a target="_blank" href="https://www.cnn.com/2024/08/17/politics/video/harris-economic-vision-professor-rogoff-digvid">CNN</a>. "This was a horrible idea."Rogoff's position was based on doubts about whether retailers were to blame for the wave of inflation that has weighed on Americans' spending power in the last two years. Harris called for a first-ever federal ban on the basis that firms have notched record profits at a time when many households have struggled to adjust to runaway costs. Since January 2020, grocery prices have jumped 25%.But according to market veteran Ed Yardeni, data doesn't suggest gouging is the problem.He wrote this week that the ratio between the consumer price index and supermarket producer price index has been dropping since 2000, suggesting that profit margins in the industry have been trending down, not up. CPI tracks prices paid by consumers, while PPI measures the prices paid by wholesalers.And yet, consumers feel strongly that corporate greed is a central factor for why prices have risen abruptly. In a <a target="_blank" href="https://socialeconomicslab.org/wp-content/uploads/2024/05/Why_dislike_inflation.pdf">study</a> from May, price gouging was the second leading perceived cause of inflation among surveyed consumers.Real-world examples do exist. Cal-Maine, the largest egg producer in the US, saw its profits rocket <a target="_blank" href="https://www.cnn.com/2023/03/29/business/egg-profits-cal-maine/index.html">718% in the first quarter of 2023</a>. By December, the distributor was <a target="_blank" href="https://www.reuters.com/legal/litigation/us-jury-awards-177-mln-kraft-other-producers-egg-price-fixing-case-2023-12-01/">found liable</a> for artificially inflating prices.'Price controls' a partisan label?Whether gouging deserves the blame for inflation, some have also criticized Harris' plan as an ineffective government overreach.Pundits have alluded to the price controls under President Richard Nixon. The Republican executive froze prices and wages over fifty years ago to clamp down on inflation, but it eventually jumped much higher, according to <a target="_blank" href="https://www.cato.org/blog/unhappy-40th-anniversary-nixons-wage-price-controls">Cato Institute</a>, a libertarian think tank. "I think all of us would agree that price controls have never worked," Stephen Moore, visiting senior fellow at the conservative think tank Heritage Foundation, told <a target="_blank" class="" href="https://www.cnbc.com/video/2024/08/19/harris-price-gouging-proposal-is-a-common-sense-set-of-policies-groundworkas-lindsay-owens.html">CNBC</a>. "They certainly were a complete failure in the 1970s when we had major inflation that hit 11%-12% and the government couldn't get rid of it."Broader <a target="_blank" href="https://www.stlouisfed.org/publications/regional-economist/2022/mar/why-price-controls-should-stay-history-books">examples through history</a> show that price ceilings can distort the allocation of goods and supply, as prices no longer serve to signal a surplus or scarcity. This can eventually lead to shortages and higher pricing.However, supporters of the plan argue that such comparisons are an overreaction to Harris's proposal, as the details thus far say nothing about fixing costs."This is not 'price controls.' 40 states have price gouging laws on the books. These are red states. These are blue states," Groundwork Collaborative executive director Lindsay Owens said, noting that Donald Trump also cracked down medical supply price gouging during the pandemic. "This is a common-sense set of policies."The federal ban would help patch up legal inconsistencies between each state's approach, experts <a target="_blank" href="https://www.businessinsider.com/how-to-lower-grocery-prices-inflation-harris-price-gouging-proposal-2024-8?as">told Business Insider</a>. Harris would likely find success by empowering the Federal Trade Commission to pursue bad actors, though the challenge would lie in carefully defining price gouging.While the plan's advocates have cheered this on, anonymous campaign sources that spoke with The New York Times noted that even <a target="_blank" href="https://www.nytimes.com/2024/08/21/business/economy/harris-price-gouging-ban-groceries.html">allies may have the wrong idea about what it can do</a>.Given that it would be modeled on state laws, the ban would really only come into effect in emergencies, officials said, stating that just as price-control critiques are misguided, so are expectations that the ban will immediately cut down on grocery costs.For that to happen, a campaign official cited Harris' other policy ideas, such as efforts to spur competition and support small businesses in the food sector.While economists are divided, voters seem supportive of the proposal. Summer polling from the Democratic firm Blueprint found that four out of five voters are in favor of price-gouging prosecution, as well as price fixing.

A necessary step or government overreach? Economists are divided over Kamala Harris' plan to clamp down on food inflation

The Reserve Bank is unlikely to ease the benchmark policy rate from 6.5% during 2024, given the persisting uncertainty over <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">food inflation</keyword>, State Bank of India (<keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords">SBI</keyword>) chairman C S Setty has recently said. The US Federal Reserve's first cut in <keyword id="20071327" type="General" weightage="20" keywordseo="interest-rate" source="keywords">interest rate</keyword>s in more than four years happened today, triggering central banks in other economies to follow suit. The Fed trimmed the interest rates by 50 basis point trim to its target interest rate range to 4.75-5%. "On the rate front, a lot of central banks are taking independent calls. While Fed rate cut would influence everyone, <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> would be mindful of the food inflation before taking a call on interest rate cut," Setty, who recently took over the reins of the bank, was noted as saying. "Our view is also that the rate cut during the current calendar year may not happen. Probably, we may have to wait for Q4 (January-March 2025) unless there is a good improvement in terms of food inflation," he added. Notably, RBIs <keyword id="19913109" type="General" weightage="100" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC), headed by RBI Governor Shaktikanta Das is scheduled to meet next month, between October 7-9 and take a call on interest rate. The committee will largely take <keyword id="19999652" type="General" weightage="20" keywordseo="retail-inflation" source="keywords">retail inflation</keyword>, which inched to 3.65% in August, up from 3.54% in July, into account for making rate-related decisions On the other hand, India's wholesale price index (WPI) eased to 1.31% on an annual basis, which is also a 4-month low, down from 2.04% in July. The data, released recently by the government, also highlighted the stickiness of food price inflation, which stood largely undeterred at 3.11% in August, as compared to 3.45% in July. Although WPI rates do not directly impact RBIs decision making, it does affect the retail inflation rates, although it takes time to reflect the same. Says Rahul Agrawal, Senior Economist at ICRA Ltd, “The <keyword id="20198768" type="General" weightage="20" keywordseo="WPI-inflation" source="keywords">WPI inflation</keyword> eased to a four-month low in August 2024, with the fuel and power, core (non-food manufacturing), and crude petroleum and natural gas sub-groups together pulling down the headline WPI print by as much as 70 bps in the month vis-à-vis July 2024. The core WPI inflation dipped to 0.7% in August 2024 from 1.2% in July 2024, amidst a continued softening in global commodity prices. "While prices of most food items have eased further on a month-on-month basis in September 2024, an adverse base would push up the YoY inflation prints for the primary food articles category significantly in the ongoing month, exerting upward pressure to the headline WPI inflation print for September 2024", said Agrawal. The price of the Indian basket of crude oil has averaged 6.0% lower in September 2024 on a sequential basis, touching the lowest levels in 33 months, which would also help contain the uptick in the headline WPI inflation print in the month. We anticipate WPI to touch the 2.0% in September 2024 from 1.3% in August 2024", he continued. Amongst the food articles whose prices dipped during the month were cereals (8.44%), paddy (9.12%), pulses (18.57%) and onions (65.75%), it did little to tame inflation, which continued to stay put in double digits. On the other hand, prices of potato (77.96%) and fruits (16.7%) inched up. The dip in WPI was largely led by slowdown in prices of manufactured food products (3.61%), beverages (1.9%), pharmaceuticals (1.97%) and petrol (4.23%). "While there may not be a one-to-one correspondence between the WPI and the CPI data because of the items, size, number, and relative weights assigned, the CPI data will also down-trend in sync with the RBI’s medium-term target of 4 % for the second time in nearly five years. However high food prices will induce the RBI to be wary", notes Manoranjan Sharma, Chief Economist, Infomerics Ratings.

RBI unlikely to cut interest rate in 2024, food inflation to be deciding factor, says SBI chief Setty

In line with the moderation in <keyword id="513422" type="General" weightage="20" keywordseo="retail-inflation" source="Orion">retail inflation</keyword>, wholesale <keyword id="158363" type="General" weightage="100" keywordseo="inflation-in-india" source="Orion">inflation in India</keyword> too witnessed a sharp decline in July. The annual rate of <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> based on all India <keyword id="59350" type="General" weightage="20" keywordseo="Wholesale-Price-Index" source="Orion">Wholesale Price Index</keyword> (WPI) number is 2.04 per cent (provisional) for the month of July, 2024 (over July 2023). It continues to remain in the positive territory for the ninth month after remaining in the negative zone for seven months until October. Economists often say a little rise in <keyword id="280418" type="General" weightage="20" keywordseo="wholesale-inflation" source="Orion">wholesale inflation</keyword> is good as it typically incentivises goods manufacturers to produce more. For food index, which has 24.38 per cent weightage, the rate of wholesale inflation decreased from 8.68 per cent in June, 2024 to 3.55 per cent in July. The increase last month was largely due to higher prices in various categories including food articles, manufacture of food products, crude petroleum and natural gas, mineral oils, and other manufacturing sectors. The government releases index numbers of <keyword id="116267" type="General" weightage="20" keywordseo="wholesale-prices" source="Orion">wholesale prices</keyword> on a monthly basis on the 14th of every month (or the next working day). The index numbers are compiled with data received from institutional sources and selected manufacturing units across the country. In April last year, the wholesale inflation went into negative territory. Similarly, in the initial days of COVID-19, in July 2020, the WPI was reported negative. Overall wholesale inflation was 8.39 per cent in October 2022 and has fallen since then. Notably, the wholesale price index (WPI)--based inflation had been in double digits for 18 months in a row till September 2022. Meanwhile, India's retail inflation, after breaching 5 per cent in June, softened drastically in July. According to data released by the Ministry of Statistics and Programme Implementation, retail inflation or Consumer Price Index in July was at 3.54 per cent, which is the lowest in the last 59 months. In June, taking a departure from the moderation it witnessed in the past months, it rose to 5.08 per cent, pushed by rising food prices. Food inflation for July 2024 is the lowest since June 2023. Year-on-year inflation rate based on All India Consumer Food Price Index (CFPI) number is 5.42 per cent (Provisional) for the month of July, 2024. The corresponding inflation rate for rural and urban is 5.89 per cent and 4.63 per cent, respectively. Rising food prices continued to be a headache for Indian consumers with the inflation rate in the food segment almost doubling year-on-year in June. Food prices continue to remain a pain point for the policymakers in India, who wish to bring retail inflation to 4 per cent on a sustainable basis. However the latest retail inflation data showed the overall inflation has aligned with the intended target. Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well. The eased month-on-month retail inflation, barring June, came on the heels of RBI having maintained the status quo in the repo rate for the ninth straight occasion. Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. The repo rate is the rate of interest at which the RBI lends to other banks.

Amid declining retail inflation, wholesale inflation in India moderates to 2.04% in July

<ul><li>The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> will conclude the three-day <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (<keyword id="19918491" type="General" weightage="20" keywordseo="MPC" source="keywords">MPC</keyword>) meeting today.</li><li>The central bank is expected to announce its decision on policy rates.</li><li>The <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> has maintained the <keyword id="20094323" type="General" weightage="100" keywordseo="repo-rate" source="keywords">repo rate</keyword> at 6.50% for the past nine meetings.</li></ul>The Reserve Bank of India (RBI) is set to conclude the three-day Monetary Policy Committee (MPC) meeting today, with Governor <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword> expected to announce the central bank's decision on policy rates. The meeting, which <a href="https://www.businessinsider.in/finance/news/rbis-monetary-policy-committee-meeting-begins-today-announcement-on-october-9/articleshow/113999887.cms">began</a> on October 7, has garnered significant attention, as the RBI has maintained the repo rate at 6.50% for the past nine meetings. The repo rate has remained steady since the RBI adopted a cautious stance to balance inflation control and <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword>. Key factors that the MPC is weighing include persistent inflationary pressures, particularly in food prices, as well as global economic uncertainties. According to data from the Ministry of Statistics &amp; Programme Implementation, while All India Consumer Price Index (CPI) inflation moderated to 3.65% in August--within the RBI's target band of 2-6%. <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">Food inflation</keyword> remains elevated at 5.65%, above the central bank's medium-term target of 4%. This, coupled with rising global crude oil prices due to geopolitical tensions in West Asia, has intensified concerns over inflation. Despite these challenges, the RBI has so far opted for a status quo on the repo rate, aiming to foster economic recovery after the pandemic. However, today's announcement will be closely watched to see if the central bank shifts its stance, especially given the external pressures and uncertainties surrounding global markets. Economists, however, have noted that the RBI will not make any changes in its policy stance before December. "With the focus on taming headline inflation, the RBI is likely to hold the rates although the core inflation is within the limit. It is possible the RBI may shift to the neutral stand" said M Govind Rao, Member, of the Fourteenth Finance Commission and former Director, of the National Institute of Public Finance and Policy. On September 18, the US Federal Reserve announced a steep 50 basis points interest cut in its review meeting. US Fed announced the rate cuts after holding interest rates steady for eight straight meetings. "In this overarching macroeconomic setting of heightened geopolitical tensions, core inflation inching upwards, oil price volatility, and high food inflation, we anticipate a change in the RBI's policy stance from "withdrawal of accommodation" to "neutral" at its forthcoming MPC meeting on October 9, 2024. However, we do not see any rate action coming and the benchmark interest rates may not undergo any change" said Manoranjan Sharma, Chief Economist, Infomerics Ratings. Earlier this month the central government appointed three new members to the monetary policy committee. The MPC comprises three members from the RBI and three external members appointed by the Central Government. With inputs from ANI. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/byd-emax-7-electric-mpv-launched-in-india-starting-at-26-9-lakh/slidelist/114046121.cms">BYD eMax 7 electric MPV launched in India starting at ₹26.9 lakh</a> <a href="https://www.businessinsider.in/personal-finance/news/heres-how-a-reddit-user-was-able-to-get-an-iphone-16-at-under-27000/articleshow/114035179.cms">Here’s how a Reddit user was able to get an iPhone 16 at under ₹27,000</a> <a href="https://www.businessinsider.in/stock-market/news/hyundai-swiggy-ather-upcoming-large-ipos-in-india/slidelist/114014140.cms">Hyundai To Swiggy: Everyone wants to cash in on the IPO bonanza</a>

RBI MPC announcement today: Rates unlikely to change, RBI may change stance to neutral

<ul class="summary-list"><li>Cooling labor data could still lead the Fed to cut rates by 50 basis points, Goldman Sachs' David Solomon says.</li><li>"I think the percentage chance is in the low 30s," Solomon said of a 50 basis point cut.</li></ul>It wasn't long ago that Goldman Sachs CEO David Solomon <a target="_blank" class="" href="https://www.businessinsider.com/inflation-recession-stagflation-dimon-solomon-interest-rates-economic-outlook-fed-2024-5">forecasted there could be no rate cuts</a> from the Federal Reserve this year.Now, even as the latest inflation data has most investors pricing in a 25 basis point cut in September, Solomon says a larger cut could still be in the cards. <a target="_blank" class="" href="https://www.cnbc.com/video/2024/09/11/watch-cnbcs-full-interview-with-goldman-sachs-ceo-david-solomon.html">In an interview with CNBC</a> on Wednesday, he pointed to weakening jobs data, which he says could warrant a bigger cut if labor conditions continue to soften."Our best guess is 25 [basis points]. But I think there's a case to be made for 50 [basis points] based on a little bit more softening in the labor market," Solomon told CNBC in a Wednesday interview."I think the percentage chance is in the low 30s," he said of a 50 basis point cut.Solomon said the depth of rate cuts will likely depend on further labor market data, which has flashed mixed signals in the last two months.A surprise unemployment rate increase in July sparked worries of a recession, while the August jobs report brought the unemployment rate down slightly to 4.2%, in line with expectations.Solomon forecasts the Fed will make two to three rate cuts this fall, and any further cuts will depend on progress toward the central bank's 2% inflation goal."We have to watch carefully the trajectory of inflation, and also the trajectory of growth. And candidly, it's very hard to speculate about that as you look forward because the policy direction we're going to have as we look into 2025 and 2026 is very uncertain," he said.Solomon's comments come after the highly-anticipated August consumer-price index was a mixed bag of data. The annual inflation rate eased to 2.5%, slower than forecasts and down from <a target="_blank" class="" href="https://www.businessinsider.com/inflation-consumer-price-index-in-july-fed-interest-rates-2024-8?utm_medium=ingest&amp;utm_source=markets&amp;_gl=1*16zorxn*_ga*MTY3OTgyNjg0MS4xNzIxMDE2MDM2*_ga_E21CV80ZCZ*MTcyNTk4NTE4Ni4xMjEuMS4xNzI1OTg1MzE1LjYwLjAuMA..">2.9% in July.</a> However, monthly core inflation—which excludes food and energy prices—<a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/inflation-report-stock-market-today-fed-rate-cuts-economy-outlook2024-9">rose unexpectedly</a> to 0.3%, up from 0.2% in July.Those numbers have most investors <a target="_blank" class="" href="https://www.businessinsider.com/inflation-august-consumer-price-index-federal-reserve-rate-cuts-2024-9#:~:text=Core%20CPI%20increased%203.2%25%20over,greater%20than%20July's%205.1%25%20increase.">pricing in a 25 basis point rate cut</a> at next week's Fed policy meeting."Amidst the debate over the magnitude of the first Fed rate cut, the August CPI data helped solidify the case for a 25bps rate cut at the September 18 meeting, rather than a 50bps reduction," EY economist Lydia Boussour said in a Wednesday note.Solomon said he continues to predict a 25 basis point cut, and is "predominantly in the soft landing camp," he said.

Cooling jobs data might beat out inflation in forcing the Fed to deliver a big rate cut, Goldman Sachs CEO says

<ul class="summary-list"><li>Daily essentials are inflating faster than broad inflation indexes, making life harder for many Americans.</li><li>The ALICE Essentials Index shows a 7.3% annual increase in basic costs from 2021 to 2023.</li></ul>It's no secret that Americans have been feeling the <a target="_blank" href="https://www.businessinsider.com/cpi-inflation-may-prices-rent-gas-fed-interest-rates-2024-6">pinch of inflation</a> everywhere they go — but daily essentials are only getting pricier. It could be making <a target="_blank" href="https://www.businessinsider.com/inflation-cost-of-living-what-is-middle-class-housing-market-2024-4">workers feel even worse</a>.The latest report from research organization <a target="_blank" href="https://www.unitedforalice.org/national-overview">United For ALICE</a> — which tracks asset-limited, income-constrained, but employed Americans — looks at how the costs of basic essentials are rising. <a target="_blank" href="https://www.businessinsider.com/middle-class-americans-earning-above-poverty-live-paycheck-to-paycheck-2024-4">ALICE Americans</a> make <a target="_blank" href="https://www.businessinsider.com/alice-living-paycheck-to-paycheck-without-government-assistance-snap-medicaid-2024-5">above the federal poverty level</a> but not enough to comfortably afford all their daily expenses, often making too much to qualify for government assistance.The ALICE Essentials Index, which includes housing, childcare, food, transportation, healthcare, and technology costs, has risen by a projected 7.3% annually from 2021 to 2023; comparatively, CPI has risen by 6.1%."CPI measures our whole economy and the goods and services that people of all income levels purchase, whereas ALICE Essentials is only the basics," Stephanie Hoopes, national director at United For ALICE, told Business Insider. "Those basics have been increasing even more" than broader prices, she said.And those costs are <a target="_blank" href="https://www.businessinsider.com/pay-raise-wages-inflation-recession-federal-reserve-rate-hikes-2023-11">even outpacing the rapid wage growth</a> that lower-earning Americans have seen.Data on the annual rate of change between 2021 and projected 2023 values for the ALICE Essentials Index suggests that prices have increased most in the West and Southeast. Arizona's annual rate of change for prices of the basic goods and services tracked by the essentials index during this time period was 10.4%, while Georgia, Florida, and South Carolina were all above 9%.The Midwest and Northeast were less impacted by rising prices for essentials, though many of these states were still in the 6% to 7% range.Even so, prices are still rising everywhere, as the index jumped in each region since 2021 — rising faster than most years prior. While United For ALICE anticipates the index plateauing in the South, the Midwest, West, and Northeast are expected to continue increasing through 2024.Since most inflation indexes focus on urban areas, rural areas are often omitted from many inflation numbers. The ALICE Essentials Index for rural areas was slightly higher than that for urban areas, at 7.5% and 7.2%, respectively.Americans who are ALICE were already struggling to get by: Business Insider has spoken to many employed Americans — including a <a target="_blank" href="https://www.businessinsider.com/millennial-genx-couple-makes-six-figures-feels-like-poverty-alice-2024-5">couple who bring home over six figures</a> — who still can't make ends meet.Many are excluded from federal assistance, frequently tied to an <a target="_blank" href="https://www.businessinsider.com/poverty-line-leaves-behind-low-income-americans-snap-medicare-wic-2024-6">outdated federal poverty line</a>. The poverty line is based on a formula from the 1960s that estimated people spent about a third of their income on food, which is now only 13%."Long before everybody else was upset about inflation, ALICE was dealing with inflation," Hoopes said.There's also good news in the economy, especially for those with lower wages: <a target="_blank" href="https://www.businessinsider.com/how-unemployment-rate-job-growth-looked-in-may-2024-6">Jobs numbers</a> have been encouraging, as the economy added 272,000 jobs last month — almost 100,000 more than expectations. Healthcare and leisure and hospitality were two sectors seeing the largest job increases. Still, ALICE Americans tend to be overrepresented in these roles, as many pay below the ALICE threshold of about $55,000 a year.Rising prices for essentials might be a factor in many Americans' economic gloom."I think this really helps explain the disconnect between the broad macroeconomic indicators that are showing a strong economy and that personal disconnect that we see on the ground," Hoopes said, adding: "Just the mere fact that working full time in some of these jobs that are hard jobs, you're not able to support a basic family budget — I think that explains a lot of dissatisfaction and the disconnect."Are you struggling to keep up with the cost of daily essentials? Contact these reporters at <a target="_blank" href="mailto:nsheidlower@businessinsider.com">nsheidlower@businessinsider.com</a> and <a target="_blank" href="mailto:jkaplan@businessinsider.com">jkaplan@businessinsider.com</a>.

Here's how inflation has ratcheted up the cost of basics like housing and food for families across the US

<ul class="summary-list"><li>Inflation cooled in July based on the consumer price index.</li><li>CPI rose 2.9% over the year in July, just below the forecast.</li></ul>New data out Wednesday showed inflation cooled again in July.The consumer price index increased 2.9% over the year ending in July, coming in cooler than the expected 3.0% increase and just lower than <a target="_blank" class="" href="https://www.businessinsider.com/inflation-cpi-june-prices-food-energy-fed-interest-rate-cuts-2024-7">June's 3.0% read</a>. It's the first time the inflation rate has been below 3% since March 2021, and it adds to the case that the Fed could cut rates at its next meeting.Over the month, the consumer price index rose 0.2% in July. A small increase was <a target="_blank" class="" href="https://www.investing.com/economic-calendar/cpi-69">expected</a> after a decrease of 0.1% in June.Core CPI, which excludes volatile food and energy prices, rose 3.2% for the 12 months ending July, following a 3.3% increase in June. A 3.2% increase was expected for July. This index rose 0.2% over the month from June to July, the same as the forecast of 0.2% and above the 0.1% increase in June.Meanwhile, the Bureau of Labor Statistics said on Tuesday the <a target="_blank" class="" href="https://www.bls.gov/ppi/">producer price index</a> for final demand rose 0.1% from June to July, just short of the 0.2% forecast and the previous month-over-month increase.The next Federal Open Market Committee meeting is in September, and interest rate cuts are expected after the Fed has held interest rates steady for the last year, including the <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-likely-september-federal-reserve-holds-steady-july-2024-7">FOMC's most recent decision in July</a>. <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">CME FedWatch</a> shows that markets predict the chances for a rate cut in September are pretty much 100%, but whether the Fed makes a standard-sized 25-basis-point cut or a larger 50-point cut is still up in the air.The Fed is watching for inflation to cool before committing to rate cuts. Federal Reserve Chair <a target="_blank" class="" href="https://www.youtube.com/watch?v=vv6n0oTJMRU">Jerome Powell said on July 9</a> that the Fed needs "more good data so that we can be confident that what we're seeing is really" inflation heading back toward the central bank's 2% target.Many economists think it's well past time for the Fed to cut interest rates and have expressed worries about the rapidly cooling labor market. Nick Bunker, the economic research director for North America at the Indeed Hiring Lab, told Business Insider after July's jobs report was released in early August by the Bureau of Labor Statistics that "the <a target="_blank" class="" href="https://www.businessinsider.com/jobs-unemployment-interest-rates-economy-recession-soft-landing-2024-8">soft landing for the US</a> labor market is in peril." The jobs report showed the unemployment rate stood at 4.3% in July, and the economy added 114,000 nonfarm payrolls. In July 2023, the unemployment rate was 3.5%, and the economy added 184,000 jobs.The labor market is cooling off, and <a target="_blank" class="" href="https://www.businessinsider.com/why-youre-not-getting-hired-job-interview-resume-advice-tips-2024-8">it might be harder to get a job</a> than a few years ago. "We're really moving into a place where this is more weakness than we should be comfortable with," Claudia <a target="_blank" class="" href="https://www.businessinsider.com/sahm-rule-recession-unemployment-federal-reserve-interest-rates-cut-2024-8">Sahm</a>, the chief economist at New Century Advisors and former Federal Reserve economist, said."We know that reducing policy restraint too soon or too much could result in a reversal of the progress we have seen on inflation," Powell <a target="_blank" class="" href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20240731.pdf">said</a> at the end of July. "At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment."This is a developing story. Please check back for updates.

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Cooling jobs data might beat out inflation in forcing the Fed to deliver a big rate cut, Goldman Sachs CEO says

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Here's how inflation has ratcheted up the cost of basics like housing and food for families across the US

Juliana Kaplan,Noah Sheidlower

Inflation cooled in July, adding to the case for rate cuts at the next Fed meeting

Madison Hoff

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