Inflation rises in August as gas prices go down

9/12/2022

Consumer prices ticked up during the month of August, bucking expectations that inflation would fall slightly, the Labor Department said on Tuesday.

Costs for shelter and food continued to jump, though plummeting gasoline prices helped ease overall price gains.

Overall consumer prices rose 0.1% last month — after dropping to zero in July — and are up 8.3% over the past year. That compares to the 8.5% year-over-year figure reported in July.

Core inflation, which strips out volatile food and energy prices, rose 0.6% last month — a marked increase from July’s 0.3% pace. Compared to a year ago, core inflation is up 6.3% (compared to the 5.9% increase in July).

The Federal Reserve has been raising interest rates aggressively — with another super-sized hike on the table next week — to cool inflation. Fed officials have indicated they aren’t likely to back off until there’s a meaningful, sustained cooling in price gains.

Much of the inflation relief, though, has come from a sharp drop-off in energy prices.

Global energy prices rose to staggering levels after Russia invaded Ukraine. Prices started to reverse course earlier this summer and continued a lengthy stretch of declines. That could help future inflation readings.

The national average price of gasoline is $3.71 as of Tuesday, down more than 25% from its peak in June.

Note: Inflation did not ease as expected in August, with an 8.3 percent rise in the Consumer Price Index showing that the squeeze on consumers remains acute.