US Inflation Cools Somewhat; Consumer Prices Steady in August

In August, U.S. inflation ran at the same pace as in July but slowed on an annual basis for the first time this year, according to government data released Thursday, Sept. 13, 2018. Core consumer inflation, which discounts pricing gains in food and energy, cooled for the month and from a year ago.

American consumers in August paid a bit more for food and a lot more on energy to include gasoline and fuel oil, while paying less for clothing, telecommunications and medical care. Increases in energy and medical care prices weakened year-on-year compared to their 12-month levels in July.

In a headline figure, consumer prices advanced 0.2% in August to match the increase in July, the Labor Department said in its monthly report on the Consumer Price Index. The CPI is a broad measure of what Americans pay for everything from tomatoes to used cars and trucks. The monthly gain marks a fifth straight.

In key pricing categories:

  • Prices at the pump jumped 3% last month after falling 0.6% in July. Gasoline prices surged 20.3% from August 2017. The broader index for energy, which combines items like gasoline, electricity and fuel oil, rose 1.9% in August after falling 0.5% previously. The Labor Department’s report shows energy prices increased 10.2% year-over-year compared to 12.1% previously.

  • Food prices edged 0.1% higher in August for a second month in a row. For a third consecutive time and the fifth instance this year, food prices increased 1.4% over the last 12 months.

Excluding the more volatile food and energy components, so-called core consumer prices in August rose 0.1% after three straight 0.2% increases.

"Along with the shelter index, the indexes for airline fares and used cars and trucks were among those that increased in August," the report noted. "An array of indexes declined, including apparel, medical care, communication, recreation, and personal care," it added.

Shelter or housing costs rose 0.3%, the same increase as in July. The index grew 3.4% year-on-year. 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.

"Inflation has been showing signs of heating up, boosted by the strength of the economy and increasingly tight labor market conditions. The pace of price increases may have moderated in August, but that is likely to only be a temporary reprieve," MarketWatch quoted Jim Baird, chief investment officer at Plante Moran Financial Advisors.

U.S. inflation increased 2.7% in the 12 months through August. Previously, the key inflation measure registered two consecutive gains of 2.9% — the highest levels since February 2012. Going back further, January through May levels registered in at 2.1%; 2.2%; 2.4%; 2.5%; and 2.8%.

Core inflation rose 2.2% from a year earlier after jumping 2.4% in July for the biggest core rate increase since September 2008. Until March, the 12-month rate had held at either 1.7% or 1.8% for 10 straight months. The core annual reading 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 following table of key inflation figures is for the last eight months through August, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi). 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 2018 Consumer Prices – Gains & Losses in Percent

  Feb 2018 Mar 2018 Apr 2018 May 2018 June 2018 July 2018 Aug 2018 12 Month
All items 0.2 -0.1 0.2 0.2 0.1 0.2 0.2 2.7
  Food .0 0.1 0.3 .0 0.2 0.1 0.1 1.4
    Food at home -0.2 0.1 0.3 -0.2 0.2 0.2 .0 0.5
    Food away from home 0.2 0.1 0.2 0.3 0.2 0.1 0.2 2.6
  Energy 0.1 -2.8 1.4 0.9 -0.3 -0.5 1.9 10.2
    Energy commodities -0.9 -4.7 3.0 1.6 0.6 -0.6 3.0 20.4
      Gasoline (all types) -0.9 -4.9 3.0 1.7 0.5 -0.6 3.0 20.3
      Fuel oil -3.6 -0.7 2.7 -0.7 2.9 1.2 2.2 30.9
    Energy services 1.4 -0.2 -0.5 -0.1 -1.5 -0.4 0.4 -0.4
      Electricity 0.4 .0 -0.6 0.1 -1.4 -0.4 0.3 -0.5
      Utility (piped) gas service 4.7 -1.2 -0.4 -0.6 -1.7 -0.5 0.9 0.1
  All items less food, energy 0.2 0.2 0.1 0.2 0.2 0.2 0.1 2.2
    Commodities less food, energy 0.1 -0.1 -0.1 -0.1 .0 0.1 -0.3 -0.2
      New vehicles -0.5 .0 -0.5 0.3 0.4 0.3 .0 0.3
      Used cars and trucks -0.3 -0.3 -1.6 -0.9 0.7 1.3 0.4 1.3
      Apparel 1.5 -0.6 0.3 .0 -0.9 -0.3 -1.6 -1.4
      Medical care -0.3 0.1 -0.2 1.3 0.2 -1.1 -0.3 0.3
    Services less energy 0.2 0.3 0.2 0.3 0.2 0.3 0.2 3.0
      Shelter 0.2 0.4 0.3 0.3 0.1 0.3 0.3 3.4
      Transportation 1.0 0.2 -0.4 .0 0.2 0.5 0.3 3.9
      Medical care .0 0.5 0.2 -0.1 0.5 0.1 -0.2 1.9

 

The BLS usually releases inflation data around the middle of every 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 11, 2018.

CPI data is used in calculating inflation rates and in this site’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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