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Economy in Brief

U.S. CPI Moves Up Again in August
by Tom Moeller  September 13, 2022

• Headline index increases unexpectedly.

• Core prices are strong.

• Energy prices collapse; food prices increase.

Consumer prices rose 0.1% (8.3% y/y) during August after holding steady in July. These readings are well below the 1.0% and 1.3% increases logged in May and June. A 0.1% August decline had been expected in the Action Economics Forecast Survey. Prices excluding food and energy strengthened 0.6% in August, double the July rise. The 6.3% y/y gain remained near the strongest since August 1982. A 0.3% August increase had been expected.

A 5.0% decline (+23.8% y/y) in energy prices held back the rise in the CPI last month, following a 4.6% July weakening. Gasoline prices fell 10.6% (+25.6% y/y), down sharply for a second straight month, while the cost of fuel oil weakened 5.9% (+68.8% y/y). To the upside, the price of natural gas strengthened 3.5%, up one-third y/y. Electricity prices also were strong, rising 1.5% (15.8% y/y).

Strength in food prices offset the energy price retreat in August with a 0.8% (11.4% y/y) gain. Cereal & bakery product prices surged 1.2% (16.4% y/y) while egg prices jumped 2.9% (39.8% y/y). Fruit & vegetable price gained 0.5% (9.4% y/y) and meat, poultry & fish prices rose 0.3% (8.8% y/y). Dairy product prices rose 0.3% (16.2% y/y). Nonalcoholic beverage costs increased 0.5% (13.4% y/y).

Services prices less energy rose 0.6% (6.1% y/y) after increasing 0.4% in July. Medical care services prices rose 0.8% (5.6% y/y). Shelter costs increased 0.7% (6.2% y/y) as the owners equivalent rent of primary residences gained 0.7% (6.3% y/y). Rental costs also increased 0.7% (6.7% y/y) while prices for lodging away from home edged 0.1% higher (4.0% y/y). Transportation services costs increased 0.5% (11.3% y/y) but the cost of public transportation fell 3.2% (21.1% y/y). Education Services prices rose 0.2% (1.5% y/y) while recreation service prices were little changed (+4.2% y/y).

Goods prices less food & energy rose 0.5% in August (7.1% y/y) after improving 0.2% in July. Household furnishings prices strengthened 1.1% (10.6% y/y) but appliance costs fell 1.2% (+3.0% y/y). New vehicle prices increased 0.8% (10.1% y/y) and recreation product prices rose 0.6% (3.8% y/y). Medicine prices gained 0.2% (4.1% y/y). Apparel prices rose 0.2% (5.1% y/y).

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.

Inflation in Services Likely to Rise Further Despite Slowing Goods Prices from the Federal Reserve Bank of Dallas is available here.

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