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Economy in Brief

U.S. Consumer Price Inflation Moderates Further in August
by Tom Moeller  September 14, 2021

• Overall increase is smallest since January.

• Core inflation unexpectedly weakens.

• Food & energy prices remain firm.

The Consumer Price Index rose 0.3% (5.3% y/y) during August after increasing an unrevised 0.5% in July. It was the smallest gain since January. It compared to a 0.4% rise expected in the Action Economics Forecast Survey. The CPI excluding food & energy edged 0.1% higher (4.0% y/y) last month. It was the weakest increase in six months and below the 0.9% gains logged in both April and June. A 0.4% rise had been expected.

During the last six months, the CPI surged at a 7.6% annual rate, nearly the highest since December 1981. The 6.8% (AR) surge in the core CPI over six months was the strongest since September 1982.

Services prices were fairly steady in August (2.7% y/y) after a 0.3% rise. Transportation services prices fell 2.3% (+4.6% y/y) as public transportation costs weakened 5.5% (8.4% y/y). Recreation services prices rose 0.2% (3.5% y/y) after a 0.6% gain. Shelter costs increased 0.2% last month (2.8% y/y) after rising 0.4% in July. The cost of lodging away from home fell 2.9% (+17.4% y/y) after surging 6.0%. The owners' equivalent rent of primary residences increased 0.3% (2.5% y/y) for the fourth straight month. Rents of primary residences gained 0.3% (2.1% y/y) following six straight months of 0.2% increase. Medical care services prices rose a steady 0.3% (1.0% y/y). Education & communication services prices rose 0.2% (1.3% y/y) after two months of 0.1% increase.

Goods price inflation excluding food & energy moderated to 0.3% (7.7% y/y), the smallest increase since March and down from a 2.0% monthly average in Q2. Used vehicle prices fell 1.5% (+31.9% y/y) in August after a 0.2% improvement but new vehicle prices rose 1.2% (7.6% y/y) after strengthening 1.7% in July. Medical care product prices slipped 0.2% (NSA) and fell 2.5% y/y. Education & communication product costs eased 0.1% (-0.5% y/y) after gaining 0.8% in July. Remaining strong were recreation product prices which rose 1.0% in August (3.3% y/y), double the July rise. Appliance prices strengthened 1.5% (4.3% y/y) following a 0.4% increase. Prices for household furnishings & supplies jumped 1.2% (3.3% y/y) after a 0.1% uptick. Apparel prices improved 0.4% (4.2% y/y) following stability in July.

Energy prices surged 2.0% in August (25.0% y/y), the largest of three straight months of strong increase. Gasoline prices jumped 2.8% last month (42.7% y/y) after similar gains during the prior two months. Fuel oil & other fuels prices rose 0.5% (28.6% y/y) after rising 0.6% in July. Natural gas prices strengthened 1.6% (21.1% y/y), strong for the seventh straight month, while the cost of electricity rose 1.0% last month (5.2% y/y) following a 0.4% rise during July.

Food price inflation moderated to 0.4% (3.7% y/y) last month after rising 0.7%. Food-at-home prices also rose 0.4%, and by a strengthened 3.0% y/y. Meat, poultry & fish prices rose 0.6% (7.9% y/y) following three straight months of gains between 1.4% and 2.5%, while egg prices jumped 2.6% (9.9% y/y). Dairy prices declined 1.0% (-0.5% y/y) following four months of firm gain. Cereal & bakery product costs held steady (1.6% y/y) after surging 1.2%. Fruit & vegetable prices gained 0.2% (2.3% y/y) after falling 0.9%. Nonalcoholic beverage prices strengthened 1.0% (2.0% y/y) after two months of firm gain. Prices for food away-from-home rose 0.8% (NSA). The 4.6% y/y increase has jumped from 2.1% in the middle of 2017.

The Consumer Price Index data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.

Consumer Price Index, All Urban Consumers (% chg) Aug Jul Jun Aug Y/Y 2020 2019 2018
Total 0.3 0.5 0.9 5.3 1.2 1.8 2.4
Total less Food & Energy 0.1 0.3 0.9 4.0 1.7 2.2 2.1
  Goods less Food & Energy 0.3 0.5 2.2 7.7 0.1 0.2 -0.2
  Services less Energy -0.0 0.3 0.4 2.7 2.2 2.8 2.9
 Food 0.4 0.7 0.8 3.7 3.4 1.9 1.4
 Energy 2.0 1.6 1.5 25.0 -8.5 -2.1 7.5
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