U.S. consumer prices increased in August at the same rate as in July, while annual inflation eased to its lowest level since early 2021, aided by falling energy costs. Nonetheless, underlying inflation pressures remained elevated, largely driven by persistent increases in rental costs and owners’ equivalent rent.
The headline inflation figure shows that U.S. consumer prices rose by 0.2% in August, matching the increase in July, according to the Labor Department’s September 11 report on the Consumer Price Index (CPI).
The CPI, a closely watched inflation gauge, measures what American consumers pay for everyday items ranging from clothing to cars. The 0.2 monthly increase was in line with economists’ expectations.
Overall, food prices increased by 0.1%, following two consecutive 0.2% monthly increases. Within the food category, grocery prices were unchanged after climbing 0.1%, while dining-out expenses grew by 0.3%, following a 0.2% increase in the previous month.
Meanwhile, over the past year, food inflation increased by 2.1%, down slightly from the previous 2.2% gain. Grocery prices rose by 0.9% over the year, while dining-out costs increased by 4%. These compare to prior respective increases of 1.1% and 4.1%.
In other sectors, pump prices fell by 0.6% in August after remaining unchanged in July. Year-on-year, gas prices dropped by 10.3%, compared to the previous decline of 2.2%.
The broader energy index, which includes items like gasoline, electricity, and fuel oil, declined by 0.8% for the month after remaining unchanged in July. Energy prices year-over-year fell by 4%, compared to the previous increase of 1.1%.
Excluding volatile food and energy components, the rate of core consumer prices increased by 0.3% in August, a tenth higher than expected, compared to the previous 0.2% rise.
Shelter or housing prices increased by 0.5% for the month, representing their 52nd consecutive monthly rise, following a 0.4% increase. Year-over-year, they increased by 5.2%.
The monthly climb in shelter prices "was the main factor in the all items increase," the Labor Department’s monthly report said.
Recent 12-month comparisons show gains of 5.1% in July, 5.2% in June, 5.4% in May, 5.5% in April, 5.7% in both March and February, 6% in January, 6.2% in December, 6.5% in November, 6.7% in October, 7.2% in September, 7.3% in August, 7.7% in July, 7.8% in June, 8% in May, 8.1% in April, and 8.2% in March, the latter being the most significant annual increase since June 1982.
Components of shelter include prices of items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. This index accounts for about one-third of the entire CPI.
In other closely watched pricing areas:
- Clothing prices increased by 0.3% for the month after falling previously by 0.4%. They advanced 0.3% from a year ago.
- New vehicle prices remained unchanged after two consecutive monthly dips of 0.2%. They showed a year-over-year decline of 1.2%.
- Used car and truck prices dropped by 1% in the month, following a previous 2.3% decrease. Year-over-year, they plummeted by 10.4%.
- Compared to the previous year, airline fares dropped by 1.3%. As for the month, they surged by 3.9% following a 1.6% decrease.
In terms of the headline annual rate, and a tenth lower than expected, inflation rose by 2.5% for the 12 months ending in August. This was the smallest increase since February 2021, and compared to 2.9% in the previous period.
"Although inflation has eased, it does not mean that the prices of things that people buy have actually fallen," CNBC quoted Lisa Sturtevant, chief economist at Bright MLS. "It just means that prices are not increasing as fast. In fact, U.S. consumers now are paying more than 20% more for goods and services than they were before the pandemic."
For a broader perspective and a look further back, the inflation rate peaked at 9.1% during the 12-month period ending in June 2022. This was the fastest rate of inflation since November 1981. Additionally, until March 2023, inflation rates had remained at or above 6% for 17 consecutive months.
Meanwhile, and as expected, core inflation increased by 3.2% in the year through August, matching the previous rate and maintaining the smallest increase since April 2021. This core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) to guide the central bank in setting its key interest rate.
“The road to normal inflation hit a bump in August as lingering pressures for housing and service costs once again cropped up,” Reuters quoted Ben Ayers, senior economist at Nationwide. “This should clinch a smaller, 25 basis points rate cut from the Fed next week as Fed officials remain wary to feed any lingering price momentum for the economy.”
As recently as September 2022, the annual core inflation rate at 6.6% was the highest since August 1982. Many economists consider the core reading as a better predictor for future inflation.
The following table of key inflation figures is for the last seven months through August, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on September 11, 2024. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.
February 2024 to August 2024 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
| Feb 2024 | Mar 2024 | Apr 2024 | May 2024 | June 2024 | July 2024 | Aug 2024 | 12 Month | |
| All items | 0.4 | 0.4 | 0.3 | 0.0 | -0.1 | 0.2 | 0.2 | 2.5 |
| Food | 0.0 | 0.1 | 0.0 | 0.1 | 0.2 | 0.2 | 0.1 | 2.1 |
| Food at home | 0.0 | 0.0 | -0.2 | 0.0 | 0.1 | 0.1 | 0.0 | 0.9 |
| Food away from home | 0.1 | 0.3 | 0.3 | 0.4 | 0.4 | 0.2 | 0.3 | 4.0 |
| Energy | 2.3 | 1.1 | 1.1 | -2.0 | -2.0 | 0.0 | -0.8 | -4.0 |
| Energy commodities | 3.6 | 1.5 | 2.7 | -3.5 | -3.7 | 0.1 | -0.6 | -10.1 |
| Gasoline (all types) | 3.8 | 1.7 | 2.8 | -3.6 | -3.8 | 0.0 | -0.6 | -10.3 |
| Fuel oil | 1.1 | -1.3 | 0.9 | -0.4 | -2.4 | 0.9 | -1.9 | -12.1 |
| Energy services | 0.8 | 0.7 | -0.7 | -0.2 | -0.1 | -0.1 | -0.9 | 3.1 |
| Electricity | 0.3 | 0.9 | -0.1 | 0.0 | -0.7 | 0.1 | -0.7 | 3.9 |
| Utility (piped) gas service | 2.3 | 0.0 | -2.9 | -0.8 | 2.4 | -0.7 | -1.9 | -0.1 |
| All items less food, energy | 0.4 | 0.4 | 0.3 | 0.2 | 0.1 | 0.2 | 0.3 | 3.2 |
| Commodities less food, energy | 0.1 | -0.2 | -0.1 | 0.0 | -0.1 | -0.3 | -0.2 | -1.9 |
| New vehicles | -0.1 | -0.2 | -0.4 | -0.5 | -0.2 | -0.2 | 0.0 | -1.2 |
| Used cars and trucks | 0.5 | -1.1 | -1.4 | 0.6 | -1.5 | -2.3 | -1.0 | -10.4 |
| Apparel | 0.6 | 0.7 | 1.2 | -0.3 | 0.1 | -0.4 | 0.3 | 0.3 |
| Medical care | 0.1 | 0.2 | 0.4 | 1.3 | 0.2 | 0.2 | -0.2 | 2.0 |
| Services less energy | 0.5 | 0.5 | 0.4 | 0.2 | 0.1 | 0.3 | 0.4 | 4.9 |
| Shelter | 0.4 | 0.4 | 0.4 | 0.4 | 0.2 | 0.4 | 0.5 | 5.2 |
| Transportation | 1.4 | 1.5 | 0.9 | -0.5 | -0.5 | 0.4 | 0.9 | 7.9 |
| Medical care | -0.1 | 0.6 | 0.4 | 0.3 | 0.2 | -0.3 | -0.1 | 3.2 |
The BLS releases inflation data around the middle of the month, covering consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for September and the latest annual period will be made public on October 10, 2024.
The CPI data is also used to calculate inflation rates and power this site’s U.S. Inflation Calculator, which displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.
