Inflation pressures in America unexpectedly softened last month, according to a new report from the Bureau of Labor Statistics (BLS). Specifically, the consumer price index (CPI) for all urban consumers rose by 0.2 percent in August, the fifth monthly gain in a row but a smaller increase than anticipated. On a year-over-year basis, headline consumer prices lifted in August by 2.7 percent, down from 2.9 percent in July and the weakest pace of annual growth recorded since April. Similarly, core CPI increased by just 0.1 percent last month and 2.2 percent over the past year, both less than expected.
The latest cooling of household inflation pressures should be welcomed by Americans since a separate report from the BLS this morning showed that real average hourly earnings growth on an annual basis was able to return to positive territory in August following July’s 0.2 percent decline. However, the longer term trend in household inflation still appears higher, and data out earlier this week on wholesale price trends showed a similar slowdown in inflation last month but a key measure of core services costs continued to rise. If companies are confident that pricing power remains intact then we will likely see these rising input costs start to be passed on to consumers.
Sources: Econoday, U.S. DoL, Twitter, Bloomberg, FRBSL
Post author: Charles Couch