By Natalie DeCoste
Just as economists expected the newest numbers from the Department of Labor have revealed that consumer prices and inflation are still increasing.
On Tuesday, September 14, the Department of Labor released the latest data for the August Consumer Price Index showing increases to the index. The data showed that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3% during August on a seasonally adjusted basis, according to the U.S. Bureau of Labor Statistics. The CPI-U measures what consumers are paying for goods and services, this includes groceries, clothes, restaurant meals, recreation, and vehicles
The August increase follows July’s greater increase of 0.5%. This is an even greater cooling off than June’s figure of a 0.9% increase. Over the past 12 months, the all items index increased 5.3% prior to seasonal adjustment, which is down from the 5.4% year-over-year pace in June and July, on an unadjusted basis.
The increase is smaller than what economists surveyed by Dow Jones had been expecting. These economists had predicted a 5.4% annual rise and 0.4% on the month.
“Smaller than expected increases in headline, and especially core, inflation for the month of August were underscored by easing price pressures in some of the areas where we saw the biggest increases a few months ago… supporting the idea of inflation being ‘transitory.’” said Greg McBride, chief financial analyst at Bankrate.
McBride was not fully convinced that this month’s numbers mean that America’s inflation concerns are at an end. “The debate over whether inflation will be short-lived or more sustained has not been resolved. The jury will remain out for many more months, particularly with persistent supply chain constraints,” McBride cautioned.
The rising prices can be seen in the indexes for gasoline, household furnishings and operations, food, and shelter. All of these categories rose in August and contributed to the monthly all items seasonally adjusted increase.
The energy index increased 2.0%, in large part due to a 2.8% increase to the gasoline index. This is the third consecutive month that the energy index has seen an increase. Besides the gasoline index, the electricity index increased 1.0% following a 0.4% increase the prior month. The index for natural gas also increased rising 1.6%, marking its seventh consecutive monthly increase. Over the last 12 months the energy index has increased a substantial 25%.
Meanwhile, the index for food rose 0.4%, with the indexes for food at home and food away from home increasing equally at 0.4%. The index for nonalcoholic beverages increased 1.0% in August, making this its third consecutive monthly increase. Additionally, the index for meats, poultry, fish, and eggs rose 0.7% over the month as the beef index rose 1.7%.
The food and energy indexes are considered volatile indexes and are excluded from the core price index. The core price index rose 0.1% in August. Increases were seen in the indexes for household furnishings and operations, the shelter index, and the new vehicle index, all of which contribute to the core price index. These increases were met with decreases to the index for airlines, used cars and trucks, and motor vehicle insurance.
The inflation news may reflect a slowed pace but that has done little to quell the fears that Americans have about inflation. According to a Federal Reserve Bank of New York survey published Monday, the median expectation is that the inflation rate will be up 5.2% one year from now. This is the10th consecutive monthly increase and marks yet another new high for the gauge.
“Inflation uncertainty – or the uncertainty expressed regarding future inflation outcomes – increased at both the short- and medium-term horizons to new series highs. Both measures remain well above the levels observed before the COVID-19 pandemic,” explained the survey.
Within the survey, it was revealed that consumers expect the price of items such as food, gasoline, medical care and rent to increase over the next year. Meanwhile, expectations for college tuition inched down slightly to 7% and Americans expect the prices of homes to fall slightly, with one-year expectations decreased slightly to 5.9%.