Even as headline inflation cools somewhat, many Americans are still feeling the pinch when it comes to essentials. In August 2025, U.S. inflation rose 2.9% year-over-year, with core inflation (excluding food and energy) also up around 3.1%.[1] Meanwhile, costs for rent, utilities, and groceries continue to increase, stretching budgets.[2] With a recent Federal Reserve rate cut (0.25%) in mid-September[1], households and investors alike should prepare for a fall marked by balancing rising costs and recalibrated monetary policy. Understanding where price pressures are worst, and how to manage or hedge against them, is more relevant than ever.
- Tighten Your Budget on Essentials: Examine recurring bills like utilities, electricity, internet, and groceries. Small adjustments, such as switching providers, negotiating rates, or reducing usage, an yield meaningful savings. For example, electricity prices have risen roughly 7% year-over-year, and households are absorbing more of the burden.[3] Use meal planning or bulk purchases to counter rising food costs. According to the USDA, groceries (food-at-home) saw about a 2.2% year-over-year increase in July 2025.[4]
- Inflation Hedges and Investment Adjustments: Consider adding or increasing exposure to assets that historically resist inflation: Treasury Inflation-Protected Securities (TIPS), certain real assets (like real estate or commodities), or shares in utility and consumer staple sectors. Keep fixed income allocations diversified. With the Fed cutting rates slightly, yield curves and bond returns are sensitive to inflation expectations. Staying nimble, such as with shorter duration or laddered fixed income, can reduce risk.
- Policy & Rate Watch: Rate cuts have begun, but the Federal Reserve has emphasized its limited flexibility given persistent inflation risks, especially in housing, core services, and import price pressures. Markets are watching speeches, Fed minutes, and incoming CPI/PCE data. Keep an eye on import price data and tariffs as well.
While inflation may no longer dominate headlines like it once did, its effects can be felt, especially on household essentials. The recent Fed rate cuts are encouraging, however, cost pressures linger. By adjusting budgets now, choosing inflation-resistant investments, and monitoring economic policy closely, you can protect your financial position over the fall and going into year-end. If you’re unsure which strategies are right for you your Wedbush financial advisor is available to help tailor a plan to match your goals.
Sources:
[2] https://www.bls.gov/news.release/cpi.nr0.htm
[3] https://www.ft.com/content/4e19bd8d-096c-48cf-89c0-37d33d025c27
[4] https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings
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