• US inflation accelerates in August, but core measure cools. The overall Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose 0.4% in August from July and 3.5% annually. That’s an acceleration from the respective 0.2% and 3.4% rates seen in July. However, the core PCE price index, which excludes gas and food prices, rose 3.9% for the 12 months ended in August, which is the lowest annual increase that index has seen in two years. This is a positive step toward the Fed’s target of 2% inflation.
• Inflation drops to a two-year low in Europe. The annual inflation rate in the eurozone fell to 9.1% in August, down from 9.8% in July. This is the first time in two years that inflation has fallen below 10% in the eurozone. The drop in inflation was driven by lower energy prices and a slowdown in the growth of food prices.
• Central banks continue to raise interest rates in an effort to combat inflation. The US Federal Reserve raised interest rates by 75 basis points for the third consecutive time on September 21, 2023. The European Central Bank also raised interest rates by 75 basis points on September 8, 2023. Central banks around the world are raising interest rates in an effort to cool demand and bring down inflation.

Outlook for Inflation

Economists are forecasting that inflation will continue to decline in the coming months. However, it is important to note that there are still significant risks to the inflation outlook, including the ongoing war in Ukraine, supply chain disruptions, and a tight labor market.

What Can You Do to Protect Yourself from Inflation?

There are a few things you can do to protect yourself from inflation, such as:

• Create a budget and track your spending. This will help you identify areas where you can cut back.
• Pay down high-interest debt. This will reduce your monthly payments and free up more money in your budget.
• Invest in assets that tend to perform well during periods of inflation. This could include stocks, real estate, and commodities.
• Talk to your employer about a raise. If inflation is outpacing your wage growth, you may be able to negotiate a raise to keep up with the rising cost of living.

It is important to remember that inflation is a complex issue and there is no one-size-fits-all solution. However, by taking steps to protect yourself, you can reduce the impact of inflation on your finances.