INDIANAPOLIS — In the latest consumer price index report the numbers show that overall inflation got a little better in the month of October.
Annual inflation year-of-year through last October was 7.7-percent, which is lower than last year over year report for August which was much higher. Even though the numbers on the surface look promising, many economists are urging you to look at the bigger picture.
Dr. Matt Will, an economist at the University of Indianapolis, is one of those experts.
“I don’t care what happened 11-months ago. I care about last month and last month stunk,” he told Tony Katz Today on WIBC. “There is a lot of bad stuff in this report!”
Will said fuel costs are still up with fuel oil for heating homes up over 20-percent from last month and gas prices up 19-percent. Will also said that borrowing has not slowed down as it should despite the Federal Reserve continuing to raise interest rates.
“The Fed is making progress. They’re doing a good job, but they still have a long way to go,” Will said. “We’re still at 40-year highs (for inflation). The Fed keeps saying ‘we’re going to keep doing this’, but the market doesn’t want to listen to them.”
With borrowing still high, the Fed has said they expect to keep raising interest rates by another .5-percent or .75-percent in the coming months. Though he said it might be far-fetched, Will added that the Fed is probably not afraid to raise interest rates close to or upwards of 6-percent. Right now interest rates are at 4-percent.
One thing that is indicative of high-interest rates right now, Will says, is the housing market.
“There is a (housing) shortage,” said Will. “It’s not going to increase because people can’t get mortgages. They can’t take loans for construction. It’s too expensive to build a home. It’s too expensive to build an apartment complex. The shortage of homes will continue, which means the cost of your shelter will continue to go up.”
Many experts with the Fed say that even though 7.7-percent is better when it comes to overall inflation, it is still a far cry away from their goal of 2-percent.