Inflation Madness: Are We Finally Leveling Out?

Do you love the feeling of a good rollercoaster? The climb, the anticipation, and then—whoosh—the plunge.

Well, inflation has been giving us a similar ride lately.

But the big question is… are we finally pulling into the station, or is there another loop-de-loop ahead?

Let’s dive into the latest Consumer Price Index (CPI) and Producer Price Index (PPI) reports to see if we’re nearing the end of this wild ride.

The Inflation Blueprint: What’s Going On with Prices?

First up, let’s talk about the Consumer Price Index (CPI), which was just released.

This report is like your rollercoaster’s control panel—it tells you where prices are heading.

In August, CPI went up 0.2%, right in line with what economists were expecting. Year-over-year, prices rose 2.5%. That’s the smallest jump since February 2021.

So, a small win, right? But the markets weren’t exactly thrilled.

Why? The core CPI, which ignores food and energy (you know, the stuff we actually care about), rose 0.3% in August, hitting 3.2% year-over-year.

Here’s a quick breakdown of the numbers:

• The energy index fell 0.8%, after being steady in July.

• The food index only ticked up by 0.1%, following two months of 0.2% rises.

• Used car and truck prices? They dropped 1% after falling 2.3% in July.

But here’s a fun fact: rent (called "owners' equivalent rent" in fancy terms) continues to be a big reason inflation isn’t cooling faster. It’s up 0.5% for August and 5.2% for the year.

So, even if home prices are dropping across the country, rent hasn’t caught on to that yet!

The Producer Price Index: What’s Happening Behind the Scenes?

Next, we’ve got the Producer Price Index (PPI), which was released this morning.

Think of this as what’s happening backstage in the economy, where companies set their prices.

PPI also rose 0.2% in August—again, right on target. Over the past year, it’s up 1.7%, which is down from July’s 2.1%.

Here’s the scoop on the core PPI, which skips food, energy, and trade margins: it rose 0.3%, the same as July. For the year, it jumped 3.3%.

More juicy details:

• Final demand services (think of hotel rooms, for example) went up 0.4% in August, after falling 0.3% in July. Guestroom rentals were a major culprit, jumping 4.8%.

• Final demand goods? No change in August, after a 0.6% rise in July.

• Food prices nudged up just 0.1%, while energy dropped 0.9%.

So, what’s the bottom line?

Inflation’s cooling down, but not fast enough to send the Federal Reserve into a panic.

What Does This Mean for the Fed?

Speaking of the Fed, they’ve got a big meeting next Wednesday (mark your calendars!).

The word on the street is that they’re planning to cut key interest rates, and nothing in these reports changes that.

Inflation is finally on track, with the Fed’s favorite measure, the core Personal Consumption Expenditures (PCE) index, hitting their 2% target.

Plus, Treasury yields have fallen too, with the 10-year yield at about 3.7%. The yield curve (which shows short-term bonds are no longer paying more than long-term ones) is back to normal, which should ease some recession fears.

Looks like the rollercoaster’s about to slow down, right? Maybe… but there’s something else on the horizon.

The Start of Another Wild Ride: Enter AI

Just when you thought the ride was over, another one’s about to begin.

There’s a financial tsunami heading our way, and it’s called artificial intelligence (AI).

Now, I’m not talking about some overhyped fad.

AI is going to shake things up more than anything we’ve seen before. And if you want to survive this wave, it’s time to get serious about investing.

The best way to protect yourself is by owning shares of companies that are leading the charge in this new AI economy.

The stock market is the only place where you can align yourself with innovators and entrepreneurs shaping the future.

So, buckle up—it’s time to pick those winning stocks.

What’s Next? Let’s Chat!

So, what do you think about these latest inflation numbers? Do you feel like we’re finally nearing the end of the ride, or do you think there’s more to come?

More importantly, are you ready for the next wave—AI?

Let me know your thoughts!

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