Rising shelter and food costs offset drop in gas prices
Inflation rose 0.1% in August and is up 8.3% for the year, according to the latest Bureau of Labor Statistics numbers. Rising shelter and food costs offset a drop in gas prices, leading to an increase that was more than economists expected.
Excluding volatile food and energy costs, the Consumer Price Index increased 0.6% from July and is up 6.3% year-over-year.
The good news is that energy prices fell 5% in August, with gasoline dropping 10.6%. But food prices increased 0.8%, and shelter costs rose 0.7% and are up 6.2% from this time last year.
In the medical care services sector, prices rose 0.8% for the month and 5.6% for the year. Many economists expect this area to continue to increase as annual contracts expire and new pricing is put in place by year’s end.
Hourly earnings rose 0.2% when seasonally adjusted for the month, but art still down 2.8% from last year. Policymakers are concerned about the gap between job openings and available workers as labor force participation is below pre-pandemic levels, resulting in rising wages that have put pressure on prices.
The CPI report most likely means the Federal Reserve will stick to its 0.75 percentage point interest rate increase this month, with the possibility of a full-point increase coming into play, according to many economists. The Federal Reserve has raised interest rates four times this year for a total of 2.25 percentage points.