Beyond oil, there’s not much to cheer about inflation

CNN

By Nicole Goodkind, CNN Business

Prices in the United States remained the same last month. It’s cause for celebration: this is the first time they have not increased since November 2020.

It could also mean that the Fed’s efforts to rein in inflation are finally working and that a soft landing, where inflation is contained without tipping the economy into recession, is achievable.

I’ll give you a minute to put on your party hats.

Now it’s time for the bad news. And there are quite a few.

First of all, the only reason prices haven’t risen overall is because of lower energy costs. Everything else has increased.

The cost of gas in the United States has fallen for nearly two months in a row and is down about 67 cents in the last month alone. Oil fell to around $90 a barrel after rising above $120 a barrel in June.

See here: The average price of a gallon of regular gasoline fell below $4 on Thursday for the first time since March.

We are all happy to take a break at the pumps. But inflation excluding food and energy prices is still very, very high compared to a year ago. Randall Kroszner, former Federal Reserve Governor, told CNN that while inflation has likely peaked, it will take at least a year before inflation returns to the Fed’s target level of 2%.

“Underlying inflation is still very worrisome for the Fed, significantly above what the Fed wants it to be,” said Kroszner, now a professor at the University of Washington’s Booth School of Business. Chicago. “It is too early to give the signal of victory because core inflation really needs to fall. This is a report.

Meanwhile, there is no guarantee that energy prices will continue to fall. The Federal Reserve, the central bank responsible for controlling inflation in the United States, will be the first to admit that it has little control over energy costs.

The ongoing war in Ukraine has made prices particularly sensitive to disruptions. Hurricane season is also about to begin, which could push prices up.

And we don’t get any breaks anywhere else either. Food prices rose another 1.1% last month and electricity costs 1.6%, not great for those trying to weather this seemingly endless heat wave. House prices were also on the rise, despite recent data showing home sales are slowing.

So while stocks soared in the headlines — the consumer price index rose at a slower pace than a year ago, which is in line with analysts’ expectations — things don’t aren’t quite as promising when we take a look under the hood.

Producer price data for July, due later Thursday, will be watched closely for further clues.

About those food prices

We know that food prices rose another 1.1% last month, but it’s hard to understand why they aren’t falling when fuel prices are falling. After all, transportation is a big part of what you pay for at the grocery store.

Over the past 12 months, grocery store prices have climbed 13.1% — the largest annual increase since the year ending March 1979, the Bureau of Labor Statistics reported Wednesday.

So what gives? A number of external factors contributed to the rise in food prices, my colleague Danielle Wiener-Bronner reports: a deadly bird flu led to a drop in egg numbers in the United States, a severe drought in Brazil reduced coffee harvests and war in Ukraine spiked wheat prices in the spring.

The United States cannot control these headwinds, and so food prices are largely beyond the control of the Fed. The Fed believes that “food and energy are influenced by global commodity prices in a way that tells them, ‘Hey, these things aren’t really directly under your control,'” noted Michael Gapen, head of of the American economy at Bank of America Global. To research.

There are several ways to bring prices down: labor and packaging costs have also been high and these tend to be passed on to your bill at the grocery store.

Learn more here.

I’m not a doctor, I just play one on TikTok

Hospital nurses, rightly seeking to relieve some stress during the height of the Covid-19 pandemic, coordinated and filmed dances that went viral on social media platform TikTok.

Now, TikTok’s parent company, Bytedance, is looking to enter the urgent care industry through another door. The company reportedly paid $1.5 billion to acquire Amcare Healthcare, which runs a group of children’s and women’s hospitals across China.

It’s odd that a company whose expertise is going viral is turning to infection control, but Bytedance isn’t the first tech giant to dabble in healthcare. Alibaba and JD.com run online pharmacies, and Amazon announced in July that it would pay $3.9 billion to acquire One Medical.

Next

OPEC monthly report; US Producer Price Index for July; Earnings from Utz Brands, Warby Parker and Wheels Up.

Friday: UK GDP; University of Michigan Consumer Sentiment Survey.

The-CNN-Wire
™ & © 2022 Cable News Network, Inc., a WarnerMedia company. All rights reserved.