“We would be concerned about higher energy inflation if we thought it was likely to persist,” Caldwell says, “But that’s unlikely to be the case.”Ĭaldwell adds that oil prices have risen further over the past month, which he says will likely create a further bump in the energy component in the September and October CPI reports.
Oil prices rose from about $70 per barrel at the beginning of July to $81 per barrel at the beginning of August, Caldwell notes, which drove the higher gasoline prices. Utility (piped) gas service prices gained 0.1%, fuel oil prices increased 9.1%, gasoline prices rose 10.6%, and electricity prices climbed 0.2%. Energy prices rose 5.6% overall in August after increasing 0.1% the prior month. Within the report, the index for gasoline was the largest contributor to the monthly all-items increase, accounting for over half the total gains. Core CPI rose 0.3% after rising 0.2% in July. From month-ago levels, CPI rose 0.6% in August after rising 0.2% in July. The core CPI reading matched expectations. The headline rise of 3.7% came close to economists’ expectations of 3.6%.
Core CPI rose 4.3% in August over the past 12 months after climbing 4.7% in July. The Bureau of Labor Statistics reported that the Consumer Price Index increased 3.7% in August from year-ago levels-a rise from July’s 3.2% rate but well below the June 2022 peak of 9.1%.
“With core inflation continuing to normalise, the Fed will very likely refrain from another rate hike in its September meeting next week,” Caldwell says. “That’s because core inflation continues to normalise.”Ĭore inflation, which excludes the volatile food and energy components, fell to its lowest levels since March 2021, with the three-month percentage change falling to 2.4% annualised – almost in line with the Fed’s 2.0% target. “The inflation report was good news overall,” says Preston Caldwell, chief US economist at Morningstar.
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