Consumer prices remained elevated in August ahead of Fed's next meeting
Labor Department releases closely watched August CPI inflation report that showed inflation rose 3.4% on an annual basis
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Inflation remained elevated in August even as the pace of consumer price growth from a year ago remains elevated, as the Federal Reserve considers a potential interest rate hike next month.
The Bureau of Labor Statistics (BLS) said on Wednesday that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – increased 0.4% on a monthly basis and is up 3.4% from a year ago.
Expectations vs. reality
Those figures were in line with the estimates of economists polled by LSEG. The monthly data follows a reading of 0.1% in July, while the annual figure is unchanged from last month's reading.
So-called core prices, which exclude volatile measurements of gasoline and groceries to better assess price growth trends, were up 0.3% from a month ago and are 2.4% higher year over year. The monthly figure was slightly hotter than the LSEG estimate, while the annual figure was in line with expectations.
The monthly core figure represents a slight uptick after price growth was up 0.2% in July, while the annual figure is slightly cooler than last month's 2.5% reading.
INFLATION COOLED IN JULY BUT REMAINED ELEVATED AS FED WEIGHS RATE HIKES
The cost of living breakdown
High inflation has created severe financial pressures in recent years for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Price hikes are particularly difficult for lower-income Americans, because they tend to spend more of their already-stretched paychecks on necessities and have less flexibility to save.
Energy prices rose 2.1% on a monthly basis in August and increased 16.3% higher than a year ago. The increase comes after the monthly figure fell 5.7% in June and 1.5% in July.
Gasoline prices increased 3.9% in the month of August and rose 27.4% on an annual basis. Electricity costs decreased 0.2% on a monthly basis and are up 3.8% compared with last year. BLS noted the gasoline index accounted for more than one-third of the headline CPI increase.
Food prices ticked higher by 0.1% on a monthly basis and increased 2.7% compared with last year. The food at home index was unchanged from the prior month and is up 2.2% on an annual basis. The food away from home index rose 0.3% in August and is up 3.4% from a year ago.
The meats, poultry and fish index declined 0.1% from the prior month and is 3.5% higher than a year ago. Beef and veal prices declined 1% in August but are 5.9% higher than a year ago. Egg prices rose 2.9% on a monthly basis and are down 23% from a year ago as supply normalizes after an avian flu outbreak.
The fruits and vegetables index decreased 0.4% on a monthly basis in August and is up 3.2% compared with a year ago. Lettuce prices fell 6.2% on a monthly basis amid a cyclospora outbreak and the index is down 2.2% on an annual basis.
Housing prices rose 0.3% in August while the shelter index is 3% higher than a year ago. Tenants' and household insurance costs were unchanged on a monthly basis but are up 4.1% compared with last year.
Transportation services prices increased 0.5% on a monthly basis and are up 2.4% from last year. Airline fares rose 2.7% in August and are up 23.4% compared with a year ago amid higher jet fuel costs.