Food prices are still soaring - here's where the number stand

PHILADELPHIA (WPVI) -- Stocks tumbled to their worst day in more than two years Tuesday, knocking the Dow Jones Industrial Average down more than 1,250 points, following Wall Street's humbling realization that inflation is not slowing as much as hoped.

The S&P 500 sank 4.3%, its biggest drop since June 2020. The Dow fell 3.9% and the Nasdaq composite closed 5.2% lower. The sell-off ended a four-day winning streak for the major stock indexes and erased an early rally in European markets.

Bond prices also fell sharply, sending their yields higher, after a report showed inflation decelerated only to 8.3% in August, instead of the 8.1% economists expected.

Gas prices are down 10.6% since last month, but overall we are paying more for energy -- from electric to gas to natural gas -- costs are up 23.8% year-to-year.

"I think gas prices are kind of high. I mean I'm glad they're actually starting to come down some, it would be nice if they would go down a little further," said Adrian Graham of Camden, New Jersey.

And food is also more expensive. It's up 11.4% year-to-year, the largest 12-month increase since May 1979.

"When I went to the checkout it was $225," said Shari Oliver of Germantown. "That was a shock."

As for why prices are so expensive, economists say it partially has to do with the war in Ukraine, but it ultimately comes down to demand.

SEE ALSO: President Biden touts inflation reduction law despite sobering report

Tuesday's economic report - inflation at 8.3% year-to-year, though just 0.1%. from July to August - was a harsh reminder of how difficult it might be to hit the Federal Reserve's inflation target of 2% a year.

"Post COVID relaxation of prices," said Michael Lahr, Rutgers economics research professor. "People kept the prices down because they knew people couldn't buy much, and now they're seeing people continue to buy, so they'll take advantage. Sellers will take advantage of the fact that people are able to buy."

The most recent unemployment data in Philadelphia from July is 6.2%, up from 5.7% in May. While some economists say we're already in a recession, others say the U.S. needs higher unemployment numbers over a series of months.