Key facts
- US core inflation remained stubbornly above the Federal Reserve's target in August.
- The all items less food and energy index rose 0.3% month-over-month in August.
- On a yearly basis, core inflation rose 2.4% in August, down from 2.5% in July.
- The overall energy index rose 2.1% month-over-month in August.
- The index for shelter rose 0.3% month-over-month in August.
Inflation regained momentum in August, with higher energy prices lifting the headline rate and stubborn services prices keeping underlying inflation pressures alive, according to data released by the U.S. Bureau of Labor Statistics on Friday. The Consumer Price Index for all items rose 0.4% month-over-month, up from a 0.1% monthly increase in July. The energy index rose 2.1% month-over-month, driven largely by a 3.9% jump in gasoline prices.
On a yearly basis, overall inflation was 3.4%, unchanged from July. Core inflation, which excludes food and energy, rose 0.3% month-over-month, following a 0.2% increase in July. Annually, core inflation eased slightly to 2.4% from 2.5% in July.
Key contributors to the core inflation increase included communication services (+2.3%), airline fares (+2.7%), and education (+0.8%). Conversely, medical care (-0.2%) and motor vehicle insurance (-0.8%) saw decreases. Shelter costs rose 0.3% month-over-month and 3.0% year-over-year.
Sam Williamson, First American's senior economist, noted that the firmer monthly reading and persistent services inflation indicate stubborn underlying price pressures. He believes this strengthens the case for the Federal Reserve to consider another interest rate hike at its upcoming meeting, given the solid labor market.