With the Federal Reserve watching the Consumer Price Index (CPI) like a hawk to get a gauge on inflation data, consumers are on the edge of their seats waiting to see what how the FED will respond. Although the CPI isn’t the only data the FED uses to determine their decisions surrounding interests rates, it is certainly one of the leading factors. 

The U.S. Department of Labor reported today that the Consumer Pricing Index, the cost of goods across various goods and services, rose a seasonally adjusted 0.6% in August to a total of 3.7%. This is up from 3.2% in July 2023 with the leading cause of the increase being a 10.6% surge in gasoline prices.

In plain terms, the cost of goods and services rose in August by 0.6%, which is the opposite direction we want to see inflation go if we’re going to get any reprieve on interest rates. With inflation numbers UP over the last month the FED is poised to make another interest rate increase during their meeting next week. 

Inflation has been trickling down from the peak of 9% in July of 2022 since the FED started raising rates in the early half of last year. Higher interest rates naturally curb spending due to rising costs, which then lowers overall inflation. With rates being as high as they are it does come as a bit of a shock that inflation actually rose in August instead of declined like the previous 12 months. 

The FED chair made it very clear during last month’s summit that they would continue to increase interest rates until they hit their desired inflation number of 2%. There has been hope in recent weeks that the FED would not act on this because of overall inflation reduction, but the increase in August all but guarantees another .25% increase next week. 

Although it is too early to know for sure what the FED will do next week, the likely increase means a likely blow to consumer spending and overall Real Estate activity. Values across the Carolina’s have held well over the summer, increasing in some areas as much as 5% this year. However, the rising rates will undoubtedly deal another blow to consumers and their desires to move this fall and winter. 

We are still hopeful that the FED will hold rates steady for now and possibly through the end of the year to give consumers a chance to adjust to higher rates and expenditures. We will continue to monitor the market and keep our clients updated on local real estate trends and activity as we move into our fall season. As always if you have any questions or want to talk Real Estate don’t hesitate to call me directly at 980-250-2795.