The Ministry of Labor reported on Tuesday that prices of a series of consumer goods fell lower than expected in August as a sign that inflation may be starting to cool.
The consumer price index, which measures baskets of general commodities and various energy commodities, rose 5.3% year-on-year and 0.3% year-on-year. A month ago, prices rose 0.5% that month.
The economists surveyed by Dow Jones expected an annual increase of 5.4% and a monthly increase of 0.4%.
Removing volatile food and energy prices, the CPI rose only 0.1% per month, with an estimate of 0.3%, up 4% from the previous year’s forecast of 4.2%.
August figures show that the pace may be slowing, but the 5.3% annual increase still maintains the highest level of inflation in about 13 years.
Markets rebounded after the release, with stock index futures well below morning lows.
Energy prices accounted for most of this month’s rise in inflation, with broad indices rising 2% and gasoline prices rising 2.8%. Food prices also rose 0.4%. Energy has increased by 25% from a year ago, and gasoline has surged by 42% during this period.
However, excluding these two categories, the monthly CPI rises the slowest since February.
Used car and truck prices, which were the main driver of rising headline inflation, fell 1.5% in August, but are still up 31.9% from a year ago. Transportation services also fell 2.3% this month.
The Federal Reserve is watching inflation closely, but we believe this year’s burst is temporary and primarily due to factors that will soon decline. They cite supply chain bottlenecks, shortages of critical products such as semiconductors, and rising demand for pandemic-related products as key factors in returning to normal levels at some point.
The market primarily expects the Fed to begin withdrawing some of the unprecedented monetary policy offered by the central bank during the pandemic. The Federal Reserve Board itself has stated that it will probably begin to slow down monthly bond purchases by the end of the year.
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Consumer Price Index August 2021
Source link Consumer Price Index August 2021