Inflation is up yet again, largely due to rising gas prices and housing costs. For the last 12 months, the Consumer Price Index (CPI) for all items increased by 3.2%, the U.S. Bureau of Labor Statistics reported. This is up slightly from the 3.1% increase last month.
On a monthly basis, CPI increased 0.4 percentage points in February. This increase comes after the index rose by 0.3 percentage points in January.
The shelter index and gasoline index are responsible for most of February’s CPI increase. Combined, they account for 60% of the monthly increase. The shelter index rose by 0.4% while the gasoline index rose by 3.8% in February.
The energy index as a whole also rose in February, by 2.3 percentage points. In January, it had declined by 0.9 points. This is largely due to rising gas prices, which averaged $3.17 last week.
As certain indexes rise, this leaves the Fed uncertain about whether to make the rate cuts they initially promised.
"While we do not expect the trend in inflation to re-accelerate this year, less clear progress over the next few months is likely to keep the Fed searching for more confidence that inflation is on course to return to target on a sustained basis," Sarah House, a senior economist at Wells Fargo, said.
Other indexes remained unchanged last month while just a few declined. The food index, for example, held steady after rising 0.4% in January. The new vehicle index decreased slightly by 0.1%, as did the medical care services index.
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Inflation and mortgage rates are closely linked, which is why, despite lowering slightly last week, they’re still hovering close to 7%.
As of March 7th, 30-year mortgage rates averaged 6.88%, according to Freddie Mac. This is down from the end of February when rates averaged 6.94%. The current average is still higher than it was last year at this time, when rates were 6.73%, on average.
"Things are getting a little bit more healthy. It’s still a seller’s market, not a buyer’s market. There’s more buyers than there are sellers," Lance Evans, a member of the Jefferson-Lewis Board of Realtors, said.
Many buyers are holding steady, waiting for interest rates to drop. In 2023, 4.8 million homes were sold, which is the lowest number since 2011, according to Freddie Mac. This decline mostly revolved around existing home sales, as about 4.1 million existing homes were sold, a 30-year low.
The rate-lock effect caused sellers to hold onto their homes, leaving buyers scrambling for new-build properties.
As interest rates continue to drop, you may want to take advantage and start looking for a mortgage now. You can visit an online mortgage broker like Credible to compare rates, choose your loan term, and get preapproved by multiple lenders.
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Despite economic data signaling a healthy U.S. economy, many Americans aren’t so sure. The Conference Board, which researches the current consumer mindset around the economy, reported that its consumer confidence index fell from 110.9 in January to 106.7 in February.
The Conference Board's index had improved in recent months, but it took a dip last month as consumers once again worried about a recession.
The index that measures the short-term expectations for income and job growth also fell to 79.8 from 81.5 back in January. A score under 80 tends to signal an upcoming recession.
"In the case of jobs, the market is still strong, it’s just much less strong than a year ago when job swapping for higher pay was easy," said Robert Frick, an economist at the Navy Federal Credit Union.
"And now the contentious election season is coming closer into view, and national elections strongly influence perceptions of the economy."
If you’re struggling to deal with high costs and debt, a personal loan can help you pay off debt more quickly by offering a lower interest rate. Use an online marketplace like Credible to make sure you’re getting the best rate and lender for your needs.
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