Used cars, furniture, and core prices decelerated, slowing down from July’s 4.7% to 4.3%.
Consumer Price Index (CPI) data revealed that prices surged for the second straight month, marking an increase from July as gasoline prices kept rising.
Used cars, furniture, and core prices decelerated, slowing down from July’s 4.7% to 4.3%.
CPI rose by 3.7%
Consumer prices jumped 3.7% year over year in August, up from 3.2% in July. The new data released by the Bureau of Labour Statistics (BLS) revealed a second straight month of increase after the index declined 12 consecutive times in annual inflation.
The report released on Wednesday showed that the headline CPI grew 0.6% from a month earlier, up from a 0.2% gain in July. In more than a year, that was the biggest month-over-month growth. The annual pace of increases was predicted to improve to 3.6% from 3.2% and prices to increase by 0.6% in August compared to July.
The report showed a bigger-than-expected price jump, with gas prices contributing to a huge chunk of the increase at a 10.6% jump from July. Prices for WTI crude and Brent oil have continued to rise on Wednesday, trading near 10-month highs.
The official report noted that “the index for gasoline was the largest contributor to the monthly all items increase, accounting for over half of the increase.”
The data represents the last print the Federal Reserve will consider in deciding whether to keep interest rates higher for longer at the FOMC meeting in the next few days.
Read more: The pause-and-skip Federal Reserve: Powell’s next hike under the radar
Shelter costs may slow down, but rates aren’t sheltered
Shelter costs was the major contributor to headline number. The BLS noted that it has risen for 40 consecutive months but policy makers expects that it may slow down soon as asking rents prices also falls.
It’s not all gloomy. Inflation figures point to a downward trend in core inflation. Prices in core CPI are rising at a three-month average pace of 4.6% down from a 4.9% average rate before the August data was released.
Goods prices have generally fallen as the bottlenecks the pandemic created have disappeared. But due to rising employee wages, cost of services such as recreation or vehicle repairs are witnessing an uptick.
After lifting interest rate by 5.25 points in 16 months, it’s expected that the Fed may raise key interest rates once more this year.
Analysts expect that the meeting next week will come with a decision to hold rates steady, then hike again in November.
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