Consumer prices rise at slowest pace since early 2021

Published On Sep 11, 2024, 8:35 AM

The latest Consumer Price Index (CPI) report indicates that U.S. inflation cooled to its lowest annual rate (2.5%) since early 2021, with month-over-month prices increasing by 0.2%. While this marks a decline from July's rate of 2.9%, core inflation (excluding food and gas) rose by 3.2% compared to last year. The report suggests a looming likelihood of the Federal Reserve cutting interest rates, albeit only modestly, due to mixed economic signals, including a weaker jobs market.

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Stock Forecasts

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Positive

The slowdown in inflation may lead to increased consumer spending and confidence, which could positively impact certain sectors, notably consumer discretionary and financial stocks, as lower interest rates might stimulate borrowing and investment.

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Negative

Despite cooling inflation, higher core inflation could create hesitancy in aggressive monetary policy easing. This may negatively impact stocks in sectors sensitive to interest rates, particularly utilities and real estate, which tend to underperform when rate cuts are slower than expected.

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