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Inflation rose in August amid higher prices at the pump
View Date:2024-12-23 15:08:22
Inflation rose by an annual rate of 3.7% in August amid higher gasoline prices, marking the second consecutive month of rising costs.
The Consumer Price Index, which tracks a basket of goods and services typically purchased by consumers, increased 0.6% from July, the Labor Department said Thursday. On an annual basis, the increase was higher than economists' forecast of 3.6%, according to FactSet.
Yet the so-called core CPI, which excludes volatile fuel and food costs, rose 4.3% from a year ago, matching the forecast from economists surveyed by FactSet. By comparison, the core CPI had increased 7.3% in the past year, signaling that prices have cooled over that time.
The latest inflation data comes just a week before the Federal Reserve's two-day policy meeting, when officials will examine price and wage trends in deciding whether to hike interest rates or hold them steady. While inflation is far lower than its most recent peak of 9.1% in June 2022, it still remains higher than the Fed's goal of 2% — yet analysts noted that the trends toward cooling inflation could convince the central bank to keep rates steady.
"Overall, there is nothing here to change the Fed's plans to hold interest rates unchanged at next week's FOMC meeting, and we still expect weaker economic growth and a continued normalization in the labour market to help drive a sharper fall in core inflation over the next 12 months than most others expect," Andrew Hunter, deputy chief U.S. economist with Capital Economics, said in a report.
Gasoline was the biggest contributor to August's bump, contributing about half of the increase, the Labor Department said. Prices at the pump jumped from an average of $3.60 a gallon in July to $3.84 in August, according to Morgan Stanley.
Housing also contributed to the rise in prices, with the shelter index up 7.3% in August.
"In fact, if shelter is excluded from the CPI calculation, inflation was about 1%," said Bright MLS chief economist Lisa Sturtevant in a Wednesday email.
But rent growth is slowing, with median rents nationally falling year-over-year last month, she noted.
"However, it takes months for those aggregate rent trends to show up in the CPI measures, which the Fed must take into account when it takes its 'data driven' approach to deciding on interest rate policy at their meeting of the FOMC later this month," she added.
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