FORT WAYNE, Ind. (WANE) – Gas prices have fallen since peaking at five dollars a gallon a few months ago.
For that matter, so do the costs of diesel, the most likely form of energy to deliver your food and other goods.
That’s part of the reason the inflation rate fell from a June high of 9.5% to 8.1% in August for the Midwest, lower than the national inflation rate at 8.3% , according to the latest inflation figures provided by Rachel Blakeman on Tuesday. , director of the Purdue University Fort Wayne Community Research Institute (CRI). The figures come from the consumer price index.
Although interest rates have risen and the Federal Reserve is expected to raise them again by 0.75%, the housing market is still strong, based on the low housing stock here, Blakeman said.
“Clearly the cost of borrowing money is going to get more expensive,” Blakeman said, and “most of us don’t have the privilege of buying a house with cash, so for those who buy a home or for some reason they need to refinance, there will be an additional cost for this.
Homeowners who bought a home at 3% interest a year ago and are considering selling and moving to another home are probably not ready to sell “because why would you want to take that rate of 3% to love 5%, 6%, 6.5%,” says Blakeman.
Apartment prices continue to rise based not only on market demand, but also on the cost of doing business. Apartment owners also struggle with a strong wage economy, which means they must pay competitive rates to their employees, Blakeman said.
Don’t expect federal interest rates to fall as the government seeks to bring inflation closer to its target of 2% per year.
What fuels inflationary pressure is traditional market demand, not cheap money. Grocery prices are still high, including wartime wheat in Ukraine, one of the largest breadbaskets in the world, so one of the challenges is that unlike other purchases that can be delayed, everyone has to eat, Blakeman said.
The strength of the labor market is offsetting the continued rise in prices.
“Let’s say the goods went up 8%, but you got a 20% increase in salary and purchasing power,” Blakeman said.
“This is the second month that we’ve seen inflation come down from the peak in June,” Blakeman said. “We’re hopeful this trend will continue, but we also know there are a lot of market forces at play here, so the possibility of inflation returning isn’t groundless. We’re really going to have to look and see.
Blakeman warned there could be tough times ahead.
“The Federal Reserve has been very clear that it is looking to get the situation under control and that it has minimal tools to do so,” she said. “More expensive money will take some time to seep into the economy and we may get hurt as we go through this.”