What do you believe is the single most important factor driving up the cost of living in Nigeria?

Inflation continued to throttle back in August, signaling that the fast-rising prices that plagued the U.S. economy for the better part of the three years during the pandemic era are increasingly shifting into the rearview mirror. Overall inflationary pressures are "dissipating," said Sarah House, senior economist at Wells Fargo Economics. The consumer price index — which measures how fast prices are changing across the U.S. economy — rose 2.5% in August from a year ago, the U.S. Department of Labor reported Wednesday. That figure is down from 2.9% in July and is the lowest reading since February 2021.

There are still some pockets of potential concern, however, with housing perhaps the most troubling among them, economists said. But prices for staples like groceries and gasoline have normalized and the inflationary trend appears firmly to the downside, they said. "We'd expect inflation to continue to subside," though with "some ups and downs" in the data from month to month, House said.

'Tamed' but not 'vanquished'

The August inflation reading is down significantly from the 9.1% pandemic-era peak in mid-2022, which was the highest level since 1981. It's also nearing policymakers' long-term target of around 2%. "Overall, inflation appears to have been successfully tamed but, with housing inflation still refusing to moderate as quickly as hoped, it hasn't been completely vanquished," Paul Ashworth, chief North America economist at Capital Economics, wrote in a note Wednesday morning.

With that in mind, the U.S. Federal Reserve is expected to start cutting interest rates this month as its focus shifts from tackling inflation to averting recession in the face of a cooling job market. The central bank raised rates to their highest level in 23 years during the pandemic era, pushing up borrowing costs for consumers and businesses in a bid to tame inflation. Both House and Ashworth expect the Fed to cut rates by a quarter of a percentage point at its upcoming policy meeting next week.

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