Nicholas A. Juhle, CFA®

Chief Investment Officer

August Inflation – Higher Than Hoped Despite Declines at the Pump

U.S. inflation was more resilient than anticipated in August despite falling energy prices, keeping pressure on the Fed to implement a third 75 bps rate increase later this month.  The Consumer Price Index rose 8.3% from a year earlier, down from 8.5% in July and a peak of 9.1% in June, but higher than expected.  The index rose 0.1% compared to July on increasing food, shelter and healthcare costs and despite continued declines in energy and gasoline prices.

  • Consumer prices (CPI) increased 8.3% year-over-year.  In August, the consumer price index (CPI) increased 8.3% compared to the same period a year ago, decelerating slightly from 8.5% in July.  Expectations ranged from 7.9% to 8.3% with a median of 8.1%.  Core CPI (excludes food and energy) increased 6.3% year-over-year, accelerating slightly from 5.9% in June and July, but below the March peak of 6.5%.  While price increases were broad-based, energy costs (+24%) including gasoline (+26%), and food (+11%) including groceries (+13%) were among the larger contributors to the year-over-year change.
  • Consumer prices (CPI) increased 0.1% month-over-month.  In August, consumer prices increased 0.1% compared to July.  Expectations ranged from -0.4% to +0.2% with a median of -0.1%.  Lower energy costs (-5%) led by falling gasoline prices (-11%) were more than offset by higher food and shelter costs for the month.  Shelter costs, which represent nearly one third of the consumer price index and tend to increase with a lag, increased 0.7%, marking acceleration from the 0.5% pace seen over the last six months.  Core CPI (excludes food and energy) increased 0.6% compared to July.