The PPI dropped for a second month in a row, a first since the start of the pandemic, with the decline largely driven by easing energy prices. Excluding food and energy costs, prices rose 0.2%. So while today’s report offers some good news about inflation, yesterday’s consumer inflation figures show that higher prices on many essentials like groceries are still burning a hole in our wallets. But even with higher prices, Americans seem to be feeling better about the state of their personal finances. Research company Morning Consult’s Index of Consumer Sentiment showed that U.S. consumer confidence jumped 5.5% in August—the biggest increase since March 2021. The report showed an increase in consumer confidence in 44 out of 50 states, largely driven by falling gas prices. Meanwhile, taking out a mortgage got more expensive as the average rate on a 30-year fixed-rate loan surpassed 6% for the first time since 2008, according to the latest data from the Mortgage Bankers Association (MBA). As higher mortgage rates continue to push potential homebuyers out of the market, mortgage applications declined 1.2% in the week of Sept. 9, compared to the week prior, and mortgage refinancing activity (which is sensitive to changing rates) continued to remain more than 80% lower compared to last year. A worse than expected retail inflation number dragged stock markets down yesterday, and also set the stage for what’s to come next. With inflation still soaring, economists are predicting the Federal Reserve will try to fight it with a super-sized rate hike next week. While it was the shock of the August inflation data that rattled markets, volatility may likely come down as the market sentiment begins to factor the Fed’s next move.
