New numbers from Bureau of Labor Statistics show inflation is slowing
HUTTO, Texas (KEYE) — New numbers from the Bureau of Labor Statistics show inflation slowed to 4% in the month of May.
The Federal Reserve is set to meet this week and based on the slowing inflation, may not raise interest rates again. But you might want to hold off on splurging this summer.
Most consumers won’t feel that slowing inflation in their wallet because the inflation number is a sum of all parts, and not all of those parts are cooling down. Rent is part of the reason why.
In Hutto, Texas, Julie Dziema feels lucky she was able to buy a house last year when interest rates were low.
"It was literally at the right place, at the right time," Dziema said.
But now, interest rates are not so low and that’s discouraging people from buying.
"I think a lot of families are not going to be able to buy homes and that started last year, and it’s only going to get worse," Dziema added.
Mortgages are becoming more expensive, so people can't move out of rentals into home ownership because rates have gone up so one doesn't help the other," said Stephen Patterson, a financial strategist at Key City Capital. "In the short term, over the next three or four months I think you're going to see prices stay uncomfortably high."
Energy is another factor. It was down, but as the summer heats up, demand will grow. When it comes to gasoline, those prices are also expected to rise.
"Saudi Arabia has cut oil production by about a million barrels a day which is going to have an impact on the supply," said Patterson.
The trickle-down effect means you might not get a break at the grocery store either.
But Patterson advises consumers to tighten their belts a little longer and don't turn to credit cards because interest rates are high.
"For consumers that are financing this period of inflation with their credit card, they're going to get hit with some pretty steep payments," said Patterson.