Core inflation in August rose as the CPI showed price increases across several points, including energy, housing and airfares. Core inflation in August saw its largest monthly increase for the year as consumer prices rose on housing, energy, and many other items. According to the United States Department of Labor, the consumer price index (CPI) rose 0.6%, seasonally adjusted, up 3.7% from the same period last year. Economists polled by Dow Jones had predicted that the CPI would increase by 0.6%. However, the prediction for the increase from last August was slightly lower at 3.6%. The CPI is a metric that measures the general change in consumer prices based on a market basket of consumer goods and services. In July, the CPI rose 0.2% from June, which was also a 0.2% increase from
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Core inflation in August rose as the CPI showed price increases across several points, including energy, housing and airfares.
Core inflation in August saw its largest monthly increase for the year as consumer prices rose on housing, energy, and many other items. According to the United States Department of Labor, the consumer price index (CPI) rose 0.6%, seasonally adjusted, up 3.7% from the same period last year. Economists polled by Dow Jones had predicted that the CPI would increase by 0.6%. However, the prediction for the increase from last August was slightly lower at 3.6%.
The CPI is a metric that measures the general change in consumer prices based on a market basket of consumer goods and services.
In July, the CPI rose 0.2% from June, which was also a 0.2% increase from May. In addition, the July increase was 3.2% from last year, with June at 3%.
For August, the CPI, excluding food and energy, rose 4.3% from 2022. This was lower than the 4.3% recorded in July. Energy prices jumped 5.6% on the month, with food and shelter costs rising 0.2% and 0.3%, respectively.
The report also revealed that although airfares rose 4.9% on the month, they were still down 13.3% compared to the year before. Transportation prices also climbed by 2% in August. However, the price of used vehicles fell 1.2% and 6.6% year over year.
Housing Major Catalyst to Increase in August Core Inflation
According to Bright MLS chief economist Lisa Sturtevant, housing costs are a major factor behind the increase in inflation. Sturtevant said that the annual CPI increase would only have been 1% if the calculations exclude shelter:
“Housing continues to an outsized share to the inflation measures. Rent growth has slowed considerably and median rents nationally fell year-over-year in August…However, it takes months for those aggregate rent trends to show up in the CPI measures, which the Fed must take into account when it takes its ‘data driven’ approach to deciding on interest rate policy at their meeting…later this month.”
In August, the Federal Reserve’s Federal Open Market Committee (FOMC) agreed to raise interest rates by 25 basis points as it continues to tackle inflation. At the new 5.25% – 5.50% range, the midpoint is the highest since 2001. At the time, Fed Chair Jerome Powell noted that another hike was possible because inflation was too far from the 2% target.
As the US tries to rein in inflation, the UK is not in the clear. JPMorgan Chase & Co (NYSE: JPM) recently warned of possible economic as the Bank of England (BoE) also fights inflation. JPMorgan said it expects interest rates to peak at 5.75% but warns that these figures could rise up to 7%. According to an August release from the Office of National Statistics, the UK’s CPI climbed 6.8% in the 12 months to July 2023. However, the CPI fell from 7.9% in June and 11.1% from October last year.
In a July interview, BoE Governor Andrew Baily acknowledged inflation-led challenges to the BBC. He noted that the BoE is aware of tough choices the average individual has to make considering rising costs, and assured the apex bank is working on tackling inflation.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.