The fed has held rates high for a rather long period of time and while inflation did quickly drop it remained steady for a FULL YEAR! Yes, this time last year inflation was just 3.0% per the CPI report (which might I remind you does not account for all inflation).
You know what else happened around that time?
The fed had already increase rates to just over 5%. That means in the course of 12 months with a high interest rate we never saw a reduction in inflation. In fact it remained high in areas that matter the most such as housing, gas and electric costs. All things that are not reported on the CPI number.
Food for the most part has dropped down to inflation numbers it should be at
However it for sure hasn't off set the drastic rise we saw which means your money now buys you far less food.
I saw a recent video by someone who bought food off a app form their local grocery story in 2022. The amount of that order was around $130. There was a little handy button that ask click here to reorder all products. This I think was the biggest wake up call about food prices. When clicked it added his same order from 2022 back into his cart which turned out to be a whopping $440! That's just nuts and that's inflation that is not counted into your CPI which is around 200%+ inflation on food costs. Yeah... let that sink in for a moment.
Entergy is the same story a massive increase in price that hasn't reset and is starting to climb once again.
You could even factor this one in with Electricity which is still up 5% month over month.
Ah but the real kicker and one that is breaking a lot of dreams right now is the housing market otherwise known as "Shelter" another report that's not included in your CPI inflation number.
Ah yes you ever take a look at your homes value 5 years ago to today? I bet you it's nearly 100% increased in that time frame. You know what else didn't increase? Wages which on average increased by roughly 5%. That means in 5 years time the cost of buying a home meant you needed 95% more money to buy the same home but where are you going to get that money from? It's for sure not going to be a job!
This will most likely now put pressure on the Fed to start lowering the rate. That pressures been building and now that we are closer and closer to election season I'm sure we will see at least one hard push to lower inflation. I mean the Dems need it they legit are shooting themselves in the food with crypto at the moment.
The issue with this however is if it's lower too early and too fast we could see inflation soar to all new highs which is a trend that has repeated in history time and time again.
Are times about to be good again or will inflation come back with a vengeance in 2025-2026?
