Pittsburgh economist explains what latest data means for your holiday budget
PITTSBURGH (KDKA) — The latest economic data dropped Wednesday and consumer prices rose slightly in October, which is impacting people's holiday budgets.
Inflation ticked up last month and it's a sign that price increases might be stalling.
Gus Faucher, the chief economist of the PNC Financial Services Group, thinks the Federal Reserve will continue to cut interest rates leading to lower borrowing costs, meaning it's easier to do a home renovation or buy a new car.
"What we're seeing is that inflation is slowing which means prices are going up now but they aren't going up as quickly as they were in 2021, 2022, 2023 and so that's good news for consumers," Faucher said.
If inflation is trending down towards the target 2%, why are prices still so high?
"So when you look at grocery prices now, they're about 27% higher than they were before the pandemic so they've gone up a lot over the past few years. What we're seeing now is they're only going up about 1% over the past year," Faucher said.
Faucher says that's good news, but he wants consumers to know they'll never see the low prices at grocery stores they saw pre-pandemic.
"If we see prices falling broadly in the economy, that means we're in a recession. That means we're not buying things and that's why prices are falling," Faucher said.
He said although inflation was and is top of everyone's mind, "During the presidential election, both of the candidates were talking about bringing down prices, but it didn't make any difference who won. No one was going to do that."
"To bring down prices would require a severe recession and no politician wants that," he explained.
And we might even see even more positive news by the holidays because the Federal Reserve is expected to meet in December and consumers could even see another cut.