Here are the takeaways from today’s Morning Brief. sign up Every morning you will receive the following message in your inbox:
Investors have been celebrating a victory over inflation in recent months.
After all, part of this year’s market rally is driven by the belief that the Federal Reserve is on track to reduce inflation, the highest level in 40 years, set in 2021.
Friday’s release of the Personal Consumption Expenditures Price Index, the Fed’s preferred inflation measure, showed it is the Fed’s target measure on a “core” basis, excluding food and energy, and that prices over the past six months have increased at an annualized pace. showed an increase in 1.9%.
The Fed also has a 2% inflation target, and this move shows the Fed is on track to meet that mandate.
But the news for consumers behind this report is even more heartening when you consider what’s happening at the gas pump.
As this week’s chart shows, the headline PCE inflation rate, which includes all categories, showed that prices actually fell by 0.1% from the previous month. This was the first complete price decline since April 2020.
Earlier this year, Fed Chairman Jay Powell acknowledged that “core” inflation is not what most consumers are actually thinking about. We still need to eat and move. And now you can do it for less.
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