Finance
Gas, housing and car insurance costs soar, fueling inflation in March
March inflation showed gas, housing and car insurance ticking up for another month (iStock)
Consumer prices rose faster than expected in March, pushing inflation up and giving the Federal Reserve more reason to delay dialing back interest rates.
On an annual basis, prices rose 3.5% in March, more than the 3.2% growth last month and above the 3.4% growth economists had expected, according to the Consumer Price Index (CPI) released by the Bureau of Labor Statistics (BLS). On a monthly basis, prices increased 0.4%, the same rate of growth as the previous month. Core inflation, which excludes more volatile food and energy prices, increased 0.4%, as it has done in each of the two preceding months. On an annual basis, core CPI rose 3.8%.
Shelter and gas costs weighed heavily on consumer expenses, contributing to over half the monthly increase in the index for all items. The energy index rose 1.1% in January after increasing 2.3% in February. Shelter prices increased 0.4% over the past two months to register an annual increase of 5.7%. Consumers also face rising prices in other areas of spending; notably, car insurance prices increased 2.6% in March, following a 0.9% increase in February. The index for apparel increased by 0.7% over the month. Also rising were prices for personal care, education and household furnishings and operations.
March’s CPI reading dampens the prospect that the Fed will reduce interest rates soon. Following its March meeting, Fed Chair Jerome Powell said that interest rate cuts were still on the table for this year, but the central bank revised projections of rate cuts to just three this year. Powell said that the Fed remained committed to bringing inflation down to a 2% target rate and warned that lowering rates too soon would bring the risk of bringing inflation back while holding back too long posed a risk to economic growth.
“Prices continue to rise overall, pressuring the finances of American Households in particular,” Max Slyusarchuk, A&D Mortgage founder and CEO, said. “More and more, families are feeling the squeeze of rising home and auto insurance costs, which continue to edge higher and higher. However, the economy remains strong, so don’t expect the Fed to lower rates any time soon.”
If you are struggling with high inflation, you could consider taking out a personal loan to pay down debt at a lower interest rate, reducing your monthly payments. Visit Credible to find your personalized interest rate without affecting your credit score.
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Consumers dealing with a tough housing market
High mortgage rates and high home prices have made renting a better month-to-month deal than buying a starter home in all 50 of the largest metro markets, according to the Realtor.com February 2024 Rental Report. Yet the shelter index has remained stubbornly high despite evidence that rents are falling.
Part of the disparity comes from how rents are measured in the index, according to Realtor.com Chief Economist Danielle Hale. CPI calculates rents based on rent trends, cash rent paid to the landlord for shelter and included utilities, plus any government subsidies paid to the landlord on the tenant’s behalf. If a unit is owner-occupied, the index computes what it would cost to rent that home in the current housing market, known as Owners’ Equivalent Rent (OER).
“This is why shelter inflation continues to climb, even though Realtor.com data show that rents have declined for seven months in a row,” Hale said in a statement. “This is a key factor tipping households toward renting, as the monthly cost of renting a starter home is lower than buying in all 50 major markets reviewed at today’s market rates.”
Homebuyers are unlikely to get much relief from high mortgage rates, which have not dropped below 6.6% this year.
“While rate cuts in June already seem to be a long shot at this point, it still seems more likely than not that short-term rates will decline towards the end of this year,” First American Senior Economist Xander Snyder said in a statement. “However, there are plenty of global uncertainties that could lead to supply shocks that re-accelerate inflation, which could push the rate-cut horizon even further into the future.”
If you’re looking to become a homeowner, you could find your best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.
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Get your car insurance under control with these steps
Car insurance rates have steadily increased. Drivers paid an average of $1,841 to insure a car in 2023, or 5% more than they did the previous year, according to a recent report from the Zebra. That comes after a 15% jump between 2022 and 2023. Unfortunately, 2024 will likely bring more of the same.
Drivers can save money by looking for new opportunities to save with their current carrier or by switching. These are some other options to consider for keeping your auto insurance affordable:
- Compare quotes from at least four to five companies before picking a policy, and reevaluate your policy every six months to ensure it still covers your needs.
- Look into insurance discounts and savings. Policies that offer discounts for low-risk behaviors — such as AAA membership or taking a senior driving safety class — can help drivers lower their car insurance premiums. Alternatively, a telematics program can help drivers save based on their driving habits.
- Only pay for the coverage you want and need. Understanding what your policy covers is the first step towards determining if it covers your needs. All U.S. states, except New Hampshire, require liability coverage, according to Insurify. This covers injuries and property damage sustained by other parties when you cause an accident.
If you are struggling with rising prices and want to save money, you could consider finding a new auto insurance provider to lower your monthly premium. Visit Credible to compare multiple car insurance providers at once and choose the one with the best rate for you.
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Yoni Assia, Co-Founder and CEO of eToro, speaks during the Milken Institute Global Conference in Beverly Hills, California, on May 2, 2023.
Patrick T. Fallon | Afp | Getty Images
In eToro‘s IPO filing, ahead of the company’s market debut on Wednesday, the stock trading platform spent over 1,500 words spelling out the potential risks of operating in Israel, home to corporate headquarters.
While the current military conflict between Israel and Hamas hasn’t “materially impacted” business, “the continuation of the war and any escalation or expansion of the war could have a negative impact on both global and regional conditions and may adversely affect our business, financial condition, and results of operations,” eToro wrote in a section of the filing titled “Risks related to our operations in Israel.”
The company, which lets users trade stocks, commodities and cryptocurrencies, was founded in 2007 by brothers Yoni and Ronen Assia and David Ring, and is based in Bnei Brak, near Tel Aviv.
In its prospectus, eToro referenced the attacks of Oct. 7, 2023, by Palestinian Islamist group Hamas on Israel. In the year and a half since then, the two sides have mostly been at war in the Gaza Strip, where tens of thousands of Palestinians have been killed and much of the area has been made uninhabitable.
Tensions have also escalated with other designated militant groups in the region, including Hezbollah in Lebanon and the Houthis in Yemen.
“It is possible that these hostilities will escalate in the future into a greater regional conflict, and that additional terrorist organizations and, possibly, countries, will actively join the hostilities,” eToro wrote, adding that the magnitude of the conflict is “difficult to predict.”
Yoni Assia, eToro’s CEO, told CNBC in an interview that the company’s business is global, with operations worldwide. Regarding the challenges of being in Israel, Yoni Assia said “everything is in the risk factors.”
“We do hope to see more peaceful times,” he said. “It’s better for everyone and for our employees from a business point of view.”
EToro, which competes with Robinhood, had its Nasdaq debut on Wednesday. The stock popped 29% a day after eToro priced shares above the expected range. At the close of trading, the company was valued at about $5.4 billion.
EToro’s IPO comes as several tech companies get set to test the public markets following an extended drought dating back to the soaring inflation of 2022.
After the attacks of Oct.7, thousands of Israelis were called up for extended active reserve duty that caused some disruption to the country’s flourishing tech community. Ongoing obligations could “impact our competitive position and cause our sales to decrease,” eToro wrote.
Israel has also faced some backlash for its military campaign in Gaza.
The eToro filing cited International Criminal Court warrants for the arrests of Prime Minister Benjamin Netanyahu and his former minister of defense, and calls for boycotts from activist groups as potential roadblocks for the business.
The country has also been hit with credit downgrades from Fitch, Moody’s and S&P Global that could harm eToro’s operations, the filing said.
Etoro said that intensified cyberattacks since 2023, and potential damages from armed attacks, could raise costs or incapacitate its workforce due to safety concerns.
The company also highlighted tax law differences between the U.S. and Israel and the location of its executives as a potential risk factor.
“It may be difficult to enforce a U.S. judgment against us, our officers and directors in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors,” eToro wrote.
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