U.S. consumer prices rose for a third month in a row, driven higher in large by the cost of used cars and trucks which peaked to a more than 51-year high, according to a government report published Friday, Sept. 11.
Longer term, while inflation accelerated over the past year it remains tame for the most part with energy prices still a lot lower than they were last summer.
U.S. consumer prices increased 0.4% in August after rising 0.6% in July, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what Americans pay for everyday items ranging from coffee to cars.
"The monthly increase in the seasonally adjusted all items index was broad-based; a sharp rise in the used cars and trucks index was the largest factor, but the indexes for gasoline, shelter, recreation, and household furnishings and operations also contributed," the Labor Department’s report noted.
Prices at the pump advanced 2% last month after increases of 5.6% in July and 12.3% in June. Before then, they had declined for five straight months. Gasoline prices are 16.8% lower than a year ago. The broader index for energy, which combines items like gasoline, electricity and fuel oil, edged 0.9% higher in August after rising 2.5% in July. Energy prices year-over-year are down 9%.
Overall food prices for the month inched ahead 0.1% after falling 0.4% in July for their first drop since April 2019. For a second instance, food prices rose 4.1% year-on-year.
Excluding the more volatile food and energy components, so-called core consumer prices rose 0.4% in August following their July increase of 0.6% — their biggest monthly advance since January 1991.
"The sharp rise in the index for used cars and trucks accounted for over 40 percent of the increase; the indexes for shelter, recreation, household furnishings and operations, apparel, motor vehicle insurance, and airline fares also rose," the report added.
Used cars and trucks prices jumped 5.4%, their biggest monthly increase since March 1969. New car prices were unchanged for the month.
Shelter or housing costs rose 0.1% in August following an increase of 0.2% in July, while their year-over-year level registered at 2.3%. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.
Clothing prices rose 0.6% over the month while airline fares increased 1.2%.
In the headline figure, U.S. inflation rose 1.3% in the 12 months through August after climbing 1% previously. As recently as May, the rate logged in at 0.1% for the smallest 12-month increase since September 2015. In contrast, they started 2020 at 2.5%.
Core inflation rose 1.7% over the past year after a 1.6% increase which came on the heels of two straight 1.2% increases — the weakest core rates since March 2011. The core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set its key interest rate.
"Consumer prices are rebounding from the pandemic shock, but as supply shortages are resolved, upward price increases should moderate," Reuters quoted Kathy Bostjancic, chief U.S. financial economist at Oxford Economics in New York. "The Fed’s new policy objectives underscore that monetary policy will remain very accommodative for a considerable time."
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, 2020. 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 2019 to August 2020 Consumer Prices – Gains & Losses in Percent
|Feb 2020||Mar 2020||April 2020||May 2020||June 2020||July 2020||August 2020||12 Month|
|Food at home||0.5||0.5||2.6||1.0||0.7||-1.1||-0.1||4.6|
|Food away from home||0.2||0.2||0.1||0.4||0.5||0.5||0.3||3.5|
|Gasoline (all types)||-3.4||-10.5||-20.6||-3.5||12.3||5.6||2.0||-16.8|
|Utility (piped) gas service||-0.9||-1.4||0.2||0.8||.0||-1.0||-0.2||-0.5|
|All items less food, energy||0.2||-0.1||-0.4||-0.1||0.2||0.6||0.4||1.7|
|Commodities less food, energy||0.2||-0.3||-0.7||-0.2||0.2||0.7||1.0||0.4|
|Used cars and trucks||0.4||0.8||-0.4||-0.4||-1.2||2.3||5.4||4.0|
|Services less energy||0.2||.0||-0.4||.0||0.3||0.6||0.2||2.2|
The BLS tends to release inflation data around the middle of a month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for September and the latest annual period become public on October 13, 2020.
CPI data is used in calculating inflation rates and in this site’s U.S. inflation calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.