What recent trends are influencing inflation and consumer prices?
Inflation cooled this winter, but will it warm up in the spring? For Marketplace, I'm Novosafo, and for David Brancaccio. Later this week, we'll get the latest reading of the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures Price Index. We already have some encouraging news for January.
A separate measure, the Consumer Price Index, rose at a lower-than-expected pace of 2.4% on an annual basis. But the devils in the details sent us out those details. We're joined by Lauren Seidel-Baker of ITR Economics. Welcome. Thank you. So Friday's report, was that encouraging to you?
Yes, it was good that we didn't see a more rapid pickup in inflation. But for the average consumer out there who might be feeling squeezed by these higher prices, I want to be very clear, this is not a price trend that prices are going down on an outright basis. This is just saying that prices are rising by a slower amount than had been expected.
So there still is a lot of strain across certain ends of the income spectrum. But from a policy point of view, yes, we'd do like to see that number not going up quite so high.
So a lot of the pullback in inflation on Friday was attributed to lower energy prices. Gasoline prices are down more than 3%. Other costs, though, are still going up, right?
Yes, and even within the energy segment of inflation, gas prices are down due to where the global oil market is today, but electricity costs are much higher due to the electrification of just about everything and all of that AI investment, the data centers that are sopping up so much energy.
So even within that sector, we could expect to see when oil prices stabilize, there's much more upside kind of built in beneath the surface today.
Now, the Wall Street Journal was out with a story that a lot of companies are planning on more price increases due to tariffs after pausing during the holiday shopping season. Should we expect to see price increases pick up again in the months ahead?
they want to see their bottom line increase. So passing through more of that tariff, we'll probably see that in the next couple of months. I think the overall impact of tariffs, it likely peaks in the relatively near term, unless, who knows, maybe we get new tariffs put in place. I wouldn't be the one to say.
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