promoearn: Daily Money: Inflation drops to 8.5% but food prices, rent keep rising

Wednesday, August 10, 2022

Daily Money: Inflation drops to 8.5% but food prices, rent keep rising

ALL THE MONEY NEWS YOU NEED TO KNOW

Wednesday, August 10

Hello, Daily Money readers. Jayme Deerwester back with you on this Wednesday.

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Meanwhile, there's a fresh Consumer Price Index report out today, and while it shows inflation dropped from June's record high of 9.1% back to 8.5% in July, grocery prices climbed 1.3% last month and remain 13.1% more expensive than this time last year.

In July, breakfast cereal prices rose 2% from the prior month and 16.4% from a year ago. Chicken costs increased by 1.4% and 17.6% yearly. And eggs shot up 4.3% and 38% from a year ago.

Recent declines in the price of wheat, corn and other commodities are expected to push food costs down. But it could take some time for shoppers to see it in their grocery bills, says Barclays economist Pooja Sriram.

What's the difference between headline and core inflation?

The 8.5% figure I just mentioned is the headline inflation number. Core prices, which exclude volatile food and energy items, increased 0.3% in July following a 0.7% rise the prior month, according to the Labor Department's Consumer Price Index.

"While the headline number may look a lot better, the true gauge of whether inflation has peaked is what happens with core prices," Greg McBride, Bankrate.com's chief financial analyst, said.

While overall CPI will benefit from the months-long decline in oil and gas prices as well as weaker prices for commodities like metals and wheat, the core will be bolstered by several things, especially rent. Rent inflation is the largest component of CPI, making up a third of the weighted index.

"We expect official CPI rent inflation to continue to run very hot," Goldman Sachs chief economist Jan Hatzius said last week. He predicted rent inflation will increase in each of the next several months and peak at around 7% year-over-year before slowing. Annual shelter inflation was 5.6% in June.

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About The Daily Money

Each weekday, The Daily Money delivers the best consumer news from USA TODAY. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you. It even comes with its own Spotify playlist . It features nearly every song quoted here.

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