Inflation falls to a three-year low

The consumer price index (CPI) fell to 2.5%, a three-year low, in August, down from 2.9% in July, and marked the fifth straight month of decline, per the Labor Department. Core inflation, excluding food and energy prices, remained steady at 3.2%.

This cooling trend might open the door for the Federal Reserve to lower interest rates next week for the first time since 2020. Experts opine that the Fed may make a quarter-point reduction.

However, stubborn housing costs could slow inflation’s return to the Fed’s 2% goal.

Fed Chair Jerome Powell indicated that any rate cuts would be gradual, focusing on balancing inflation and labor market concerns. 

The stock market was volatile on Wednesday, with the S&P 500 fluctuating but ending with a 1.1% gain.

Oil prices have dropped to their lowest since 2021, which may reduce gas prices and further ease consumer costs.