Inflation Runs Hot in August

This morning’s inflation report was surprisingly strong. For August, the CPI rose by 0.4% (or 0.37% to be more precise). That beat Wall Street’s forecast for a rise of 0.3%. Some of this could be a bounce back effect from the lockdowns earlier this year. We had deflation in March, April and May.

Nearly 30 million people are on unemployment benefits. The Fed’s preferred inflation measure, the core personal consumption expenditures (PCE) price index, rose 1.3% in the 12 months through July. August’s core PCE price index data is scheduled to be released at the end of this month.

Gasoline prices rose 2.0% in August after increasing 5.6% in July. Food prices edged up 0.1% after declining 0.4% in July, the first decrease since April 2019. The cost of food consumed at home fell 0.1% after dropping 1.1% in the prior month.

One interesting detail from the report: the cost of used cars and trucks rose by the most in 51 years.

The core rate of inflation also rose by 0.4% (or 0.385%).

Over the last three months, inflation has been running at more than 6.2% annualized while core inflation has been at 5.1%.

Here’s a look at monthly core inflation:

Posted by on September 11th, 2020 at 10:40 am


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