U.S. Consumer Price Growth Slightly Exceeds Estimates In August
A report released by the Labor Department on Friday showed consumer prices in the U.S. increased by slightly more than anticipated in the month of August.
The Labor Department said its consumer price index climbed by 0.4 percent in August after advancing by 0.6 percent for two straight months. Economists had expected consumer prices to rise by 0.3 percent.
Energy prices saw continued growth, increasing by 0.9 percent in August after surging up by 2.5 percent in July. Gasoline prices led the way higher, jumping by 2.0 percent.
The report said food prices also inched up by 0.1 percent in August after falling by 0.4 in July, as an increase in the food away from home index more than offset a slight decline in the food at home index.
Excluding food and energy prices, core consumer prices still rose by 0.4 percent in August following a 0.6 percent increase in July. Core consumer prices were expected to edge up by 0.2 percent.
The Labor Department said a 5.4 percent spike in prices for used cars and trucks accounted for over 40 percent of the increase in core prices.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said the jump in prices for used cars and trucks reflects problems with dwindling supply.
“With goods production continuing to lag behind the rebound in spending, those problems are only going to become more acute over the next few months, pushing core inflation higher,” Ashworth said.
Prices for shelter, recreation, household furnishings and operations, apparel, motor vehicle insurance, and airline fares also rose, while prices for education and personal care were among the few to decline.
With the continued monthly increase, consumer prices in August were up by 1.3 percent compared to the same month a year ago, reflecting an acceleration from the 1 percent growth in July.
The annual rate of growth in core consumer prices also inched up to 1.7 percent in August from 1.6 percent in the previous month.
“The annual inflation rates are still a lot lower than the Fed would like,” Ashworth said. “But that’s mainly because of the sharp one-off declines in prices in the early stages of the pandemic.”
He added, “More recently there has been a lot more upward pressure on prices than we would have expected given the extent of the collapse in the real economy.”
On Thursday, the Labor Department released a separate report showing producer prices also increased by slightly more than expected in the month of August.
The Labor Department said its producer price index for final demand rose by 0.3 percent in August after climbing by 0.6 percent in July. Economists had expected prices to edge up by 0.2 percent.
Excluding food and energy prices, core producer prices climbed by 0.4 percent in August following a 0.5 percent advance in July. Core prices were also expected to tick up by 0.2 percent.
Compared to the same month a year ago, producer prices in August were down by 0.2 percent following a 0.4 percent drop in July. Core prices were up 0.6 percent year-over-year.