Consumer Price Index (CPI) data for the month of September was released Thursday morning, and with it came more bad news with regard to our economic outlook. Inflation (year over year) came in at 8.2%. Though this is down from the recent peak at 9% in June, it is still hovering around the highest levels since 1982. This “headline inflation” CPI data incorporates both food and energy prices, but even “core inflation” was up 6.6% from just a year ago.
This report almost immediately caused pain in the financial markets, as indexes fell premarket close to 3%. Food prices were a major contributor to the number as the food index rose 0.8% for the month, the same as August, and ultimately is up 11.2% from just a year ago. Closely watched shelter costs, which make up about one-third of CPI, rose 0.7% and are up 6.6% from a year ago. Transportation services also showed a big bump, increasing 1.9% on the month and 14.6% on an annual basis. Medical care costs rose 1% in September.
All of this translates to bad news for interest rates, as many hoped an inflection down in inflation would signal the Federal Reserve (FED) easing their rate hikes. The next hike is expected to be 75 basis points, and given the new CPI data, we now have to ask the question of whether they will increase it to 100 basis points instead.
This report also likely signals more trouble for Democrats nationwide, as this is the last CPI report before the general election in November. With economic issues consistently polling as the No. 1 concern for voters, this will likely not help the party in control of the federal government in November.
In Texas, this once again only hurts taxpayers. Most Texans have been having a historically rough year dealing with high gas prices, historic inflation, and the sixth-highest property taxes in the nation. Despite Texas lawmakers assuring homeowners that their historic property tax reform would provide tax relief, there has been no relief. Governor Greg Abbott announced at a recent gubernatorial debate that his goal is to “end school property taxes, and let people own their homes.” This is something TFR has been advocating for well over a year, and we expect him to add it to his legislative priorities for the next session in his “State of the State” address.
So, what else can you do to get involved?
The next legislative session is set to begin in January 2023. Your elected officials need to hear from you.
Go read the Texas Prosperity Plan for yourself and voice your support for REAL property tax relief by signing up to support the TPP. You can also sign up for The Fiscal Note to stay updated on all fiscal issues that affect Texans, especially our broken property tax system. We CAN get real tax relief if we amplify our voices loudly enough.