U.S. Core Inflation Jumps 2.4% From A Year Ago Even As Consumer Prices Rise Slightly in August

U.S. consumer prices increased only slightly in August yet a measure of underlying inflation accelerated to a more than one-year high, a government report showed Thursday, Sept. 12.

 

And for a fourth straight month, energy was cheaper and food prices climbed when compared against their levels from a year ago.

U.S. consumer prices climbed 0.1% in August after moving 0.3% higher in July, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what American consumers pay for everything from ground coffee to cars.

In key pricing categories:

  • Prices at the pump fell 3.5% after rising 2.5% in July. Gasoline prices sank 7.1% over the past year. The broader index for energy, which combines items like gasoline, electricity and fuel oil, fell 1.9% in August after rising 1.3% previously. Energy prices logged in 4.4% lower year-over-year.

  • Overall prices for food calculated flat for a third month in a row. Still, food prices rose 1.7% over the year.

Excluding the more volatile food and energy components, so-called core consumer prices advanced 0.3% in August, matching their increases in July and June. June’s advance registered as the largest since January 2018.

Shelter or housing costs rose 0.2% after two monthly increases at 0.3%, while their year-over-year pace slowed to 3.4% from 3.5%. 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.

Used car and truck prices advanced 1.1% from July’s 0.9% gain and clothing prices rose 0.2% from 0.4%. New vehicle prices, meanwhile, fell 0.1% after declining 0.2% in July.

In the headline annual figure, U.S. inflation over the past 12 months rose 1.7% from 1.8%. The 12-month inflation rate has stayed within the range of 1.5% to 2% since the period ending December 2018, the Labor Department noted. For the year so far, April’s level at 2% was the highest. February’s mark of 1.5% was the lowest year to date as well as the weakest since September 2016.

In the 12 months ending August, core inflation rose 2.4%, the largest core rate since July 2018, after rising 2.2% previously. This "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.

"The Fed will still cut rates next week to provide added insurance in the event that the trade war escalates, but it might think twice about moving again in October if core inflation shows any further spark," Reuters quoted Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.

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 Sept. 12, 2019. 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 to August 2019 Consumer Prices – Gains & Losses in Percent

  Feb 2019 Mar 2019 Apr 2019 May 2019 June 2019 July 2019 Aug 2019 12 Month
All items 0.2 0.4 0.3 0.1 0.1 0.3 0.1 1.7
  Food 0.4 0.3 -0.1 0.3 .0 .0 .0 1.7
    Food at home 0.4 0.4 -0.5 0.3 -0.2 -0.1 -0.2 0.5
    Food away from home 0.4 0.2 0.3 0.2 0.3 0.2 0.2 3.2
  Energy 0.4 3.5 2.9 -0.6 -2.3 1.3 -1.9 -4.4
    Energy commodities 1.5 6.2 5.4 -0.4 -3.5 2.4 -3.3 -7.1
      Gasoline (all types) 1.5 6.5 5.7 -0.5 -3.6 2.5 -3.5 -7.1
      Fuel oil 2.6 2.1 1.3 -0.3 -2.3 0.6 -0.9 -8.4
    Energy services -0.8 0.3 -0.1 -0.8 -0.7 .0 -0.2 -0.8
      Electricity -0.3 0.4 .0 -0.8 -0.8 0.6 -0.3 -0.1
      Utility (piped) gas service -2.4 -0.1 -0.8 -1.0 -0.3 -1.8 0.1 -3.5
  All items less food, energy 0.1 0.1 0.1 0.1 0.3 0.3 0.3 2.4
    Commodities less food, energy -0.2 -0.2 -0.3 -0.1 0.4 0.2 0.2 0.8
      New vehicles -0.2 0.4 0.1 0.1 0.1 -0.2 -0.1 0.2
      Used cars and trucks -0.7 -0.4 -1.3 -1.4 1.6 0.9 1.1 2.1
      Apparel 0.3 -1.9 -0.8 .0 1.1 0.4 0.2 1.0
      Medical care -1.0 0.4 0.9 -0.4 -0.2 0.2 0.3 0.1
    Services less energy 0.2 0.3 0.3 0.2 0.3 0.3 0.3 2.9
      Shelter 0.3 0.4 0.4 0.2 0.3 0.3 0.2 3.4
      Transportation -0.1 .0 0.1 0.1 .0 0.3 0.4 0.9
      Medical care .0 0.3 0.2 0.5 0.4 0.5 0.9 4.3

 

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 10, 2019.

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.

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