Topline
Consumer prices rose 8.3% in the 12 months ending in August—slowing down for a second consecutive month (thanks largely to some relief at the pump), but still climbing more than expected as investors await definitive signs that the Federal Reserve’s interest rate hikes may finally bring inflation back down to normal levels.
A person shops for groceries at Lincoln Market in the Prospect Lefferts Garden neighborhood of … [+]
Key Facts
Economists were expecting prices to rise 8% on an annual basis after they spiked 8.5% in July.
Overall prices were up 0.1% from July—matching economist expectations but up from zero monthly growth in June, according to data released by the Labor Department on Tuesday.
Core inflation, which excludes volatile food and energy prices, rose 0.6% on a monthly basis in August—twice as much as what economists expected and July’s increase of 0.3%; the measure climbed 6.3% year over year, its biggest spike since March.
Increases in shelter, food, and medical care prices were the largest of many contributors to the overall increase, but gas prices helped offset the gains, falling 10.6%.
In a Monday note, Goldman Sachs economists said a recent decline in oil prices helped push down airfares, while easing supply constraints contributed to decelerating price growth for automobiles.
The price of West Texas Intermediate has fallen about 3% over the past month to $89 per barrel and is down more than 25% from a June high.
Key Background
Though they remain elevated, gas prices have tumbled from record highs this summer, fueling hopes that the worst of this year’s inflationary surge may be over. The S&P 500 has climbed 4% this month but is still down 14% this year. Much of the decline has been due to investor concerns over growing Federal Reserve interest rate hikes meant to combat surging prices by cooling the economy.
Tangent
Stock futures fell immediately after the worse-than-expected report, with the S&P reversing early gains to plunge 1.3% by 7:50 a.m. ET.
Further Reading
Dow Jumps 200 Points As Investors Brace For August Inflation Report And More Fed Rate Hikes (Forbes)
It’s Not Just Inflation: Avian Flu Will Pump Up Prices Of Thanksgiving Turkeys (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2022/09/13/inflation-climbed-83-in-august-slowing-for-second-month-straight-as-gas-prices-plunged/