Rates of inflation quickened in the United States on both a monthly and year-on-year basis, according to a U.S. government report released on Wednesday, September 13th. However, underlying inflation compared to a year ago rose by the least amount in nearly two years. The monthly increase, which was the largest in 14 months, was largely driven by higher prices for energy and shelter.
In the headline monthly figure, U.S. consumer prices increased 0.6% in August — the most since June 2022, after rising by 0.2% in July, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a closely watched inflation gauge that measures what Americans consumers pay for everyday items, ranging from eggs to energy.
For the second consecutive month, overall food prices experienced a 0.2% increase. Within the food category, prices for groceries ascended by 0.2% compared to 0.3% previously. Furthermore, dining-out expenses continued to increase, rising by 0.3% compared to the previous month’s 0.2% uptick.
Meanwhile, food inflation over the past year has remained elevated at 4.3%, which is lower than the previous rate of 4.9%. During this same period, grocery prices increased by 3%, while the cost of food consumed outside of the home rose by 6.5%. These figures compare to their respective previous rising rates of 3.6% for groceries and 7.1% for dining out.
In other sectors, prices at the pump soared by 10.6% in August, contrasting with the 0.2% uptick in July.
"The index for gasoline was the largest contributor to the monthly all items increase, accounting for over half of the increase," the Labor Department’s monthly report said.
When looking at a year-on-year comparison, gas prices decreased by 3.3%, a slower rate than the previous decrease of 19.9%. To offer some context, the inflation rate for gasoline over the 12 months ending in June 2022 surged by 59.9%, marking the highest level since March 1980.
The broader energy index, encompassing items such as gasoline, electricity, and fuel oil, saw a 5.6% increase in the month of August, following a rise of 0.1% in July. Energy prices year-over-year decreased by 3.6%, which compares to the previously recorded fall of 12.5%.
Excluding the more volatile food and energy components, the rate of core consumer prices in August rose by 0.3%, after rising 0.2% in both June and July, which were the smallest since August 2021.
Shelter or housing prices exhibited a 0.3% growth for the month — their 40th consecutive monthly increase, after mirroring 0.4% increases in June and July, while still recording a substantial year-over-year rise of 7.3%. For recent comparisons, they achieved gains of 7.7% in July, 7.8% in June, 8% in May, 8.1% in April, and 8.2% in March, marking their most significant 12-month 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 grew by 0.2% for the month after registering flat previously. They have risen by 3.1% compared to a year ago.
- New vehicle prices rose by 0.3% in August, following a decrease of 0.1% in July. They exhibited a year-over-year increase of 2.9%.
- Prices for used cars and trucks fell by 1.2% after dropping by 1.3% in July. In comparison to prices from a year ago, they have fallen by 6.6%. These rates stand in stark contrast to the situation in February of the previous year when they experienced a substantial year-on-year increase of 41.2%.
- When compared to the previous year, airline fares tumbled by 13.3%. As for the month, they climbed 4.9%, after dropping 8.1% in both June and July.
In terms of the headline annual rate, inflation increased by 3.7% from a year earlier, which is quicker than the 3.2% rate reported previously.
For some perspective, there was a notable peak in the inflation rate at 9.1% during the 12-month period ending in July 2022. It was the quickest rate of inflation since November 1981. Additionally, until March of this year, inflation rates had been at or above 6% for seventeen consecutive months.
Meanwhile, core inflation increased by 4.3% over the past year, down a from 4.7% previously. 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 current pace is the slowest since September 2021. As recently as last September, the 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 Fed is likely to keep the federal funds rate unchanged at this month’s meeting, but today’s report keeps alive the potential for another interest rate hike in coming months," Reuters quoted Phillip Neuhart, director of market and economic research at First Citizens Bank in New York.
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. 13, 2023. 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 2022 to August 2023 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
|Feb 2023||Mar 2023||Apr 2023||May 2023||June 2023||July 2023||Aug 2023||12 Month|
|Food at home||0.3||-0.3||-0.2||0.1||0.0||0.3||0.2||3|
|Food away from home||0.6||0.6||0.4||0.5||0.4||0.2||0.3||6.5|
|Gasoline (all types)||1||-4.6||3||-5.6||1.0||0.2||10.6||-3.3|
|Utility (piped) gas service||-8||-7.1||-4.9||-2.6||-1.7||2.0||0.1||-16.5|
|All items less food, energy||0.5||0.4||0.4||0.4||0.2||0.2||0.3||4.3|
|Commodities less food, energy||0.0||0.2||0.6||0.6||-0.1||-0.3||-0.1||0.2|
|Used cars and trucks||-2.8||-0.9||4.4||4.4||-0.5||-1.3||-1.2||-6.6|
|Services less energy||0.6||0.4||0.4||0.4||0.3||0.4||0.4||5.9|
The BLS releases inflation data around the middle of the month for 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 Oct. 12, 2023.
The CPI data is also used to calculate inflation rates and to power this site’s U.S. Inflation Calculator. The U.S. Inflation Calculator displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.