After more than a year of slowing monthly consumer price index (CPI) readings, US inflation picked up again in August. Last month, the headline CPI rose to 3.7% from 3.2% year-on-year in July, a tenth more than economists expected and the first recovery since this cycle reached its peak in June last year. of 9.1%. The big culprit is gasoline, whose increase following the rise in oil prices has seen the month-to-month rate rise from 0.2% to 0.6%.
Easing fears, underlying inflation (excluding food and energy), which has become more entrenched in recent months and is more closely watched by central banks around the world, including the US Federal Reserve, has slowed further, this time from 4.7% in the year – compared to the previous year to 4.3%. This is the lowest value since September 2021. In a month-on-month comparison, the value was 0.2%, as forecast.
Looking at the Bureau of Labor Statistics (BLS) component breakdown of the data, gasoline’s role in this increase can be seen, with a month-over-month increase of 10.6% in August compared to numbers close to zero or negative in the previous months. This recovery has resulted in a 5.6% increase in the energy category.
Something similar happened with the transportation services category, which rose 2% last month compared to a 0.3% rebound in July. Likewise, airfares rose from an 8.1% decline in July to a 4.9% increase in August.
The counterpoint was used cars, an item that always has a significant impact on the inflation figure due to its weighting. In August, these vehicles fell by 1.2% compared to the previous month, continuing the July trend (-1.3%). This also affected consumer durables (-0.3% month-on-month). As supply chains returned to normal, goods were expected to experience deflation, but some positive readings in recent months had warned of a dangerous rebound.
The remaining categories show a fairly constant trend compared to June. Food prices rose again by 0.2%, with the annual rate slowing to 4.3%, reaching double digits at the bottom of the inflation cycle. In the housing sector, rents for first homes rose 0.5% monthly, compared to 0.4% in July. The owner equivalent rent fell from 0.5% to 0.4% in August. The services sector, which is being closely watched by the Fed given the sector’s strength in the post-pandemic recovery, returned 0.4% month-on-month.
