Mass market selloff amid august inflation report
Written by: Brady LaRoe
September 18th, 2022
Markets dropped on Tuesday following the August Consumer Price Index numbers coming out, which showed that inflation still remains high across most sectors of the economy.
The report found that prices were about 8.3% higher than in August of 2021. So while inflation is decreasing compared to prior months, it still remains steadily high. The news triggered a mass selloff and led to the Dow Jones Index dropping 1,300 points, the worst since June of 2020. The Dow ended the day around 4% lower than when it opened.
Prices for items like food, housing, and medical care were the main drivers of inflation, while the decrease in gas prices and used car prices were what led to the overall lower inflation rates. A gallon of gas costs about $3.71 nationally as of now, coming off of its high of $5 a gallon back in June.
The news comes as the federal reserve has been increasing interest rates steadily to their highest point in the past decade in order to counter inflation. Recently the head of the federal reserve Jerome Powell came out saying that there will continue to be “pain” from inflation ahead.
Persistent inflation and the decline in market values reflects the continuing market sentiment of a possible recession, though it still remains up to debate among economists, specifically on how severe it could be. One recent July Bloomberg survey of economists showed that 50% thought there would be a recession within a year, an increase up from 30% in June.
Whatever happens in the future, it seems that, at least for now, prices will continue to go up.