The August increase in US consumer goods prices was less than anticipated, as inflation showed signs that it was slowing down amid the Delta-driven Covid-19 surge, and continuing supply constraints, US Labor Department reported Tuesday.
According to the Bureau of Labor Statistics report, the consumer price index (CPI), rose 0.5% in August after increasing 0.5% in July.
According to Xinhua news agency, the latest figure is significantly lower than the 0.9 percent growth rate in June.
The report revealed that the index rose 5.3 percent in the 12 months to August, slightly less than the 5.4% pace in June and Jul.
The core CPI, which excludes volatile food and energy components was up 0.1% last month after rising by 0.3% in July. The core CPI rose by 0.9 percent in June.
The core CPI increased 4% in August compared to a year ago, which was a smaller increase that the 4.3 percent growth in July.
“Inflation has started to show signs of cooling in reaction to the Delta variant, but the level of price remains extremely high, especially for large-ticket items,” Diane Swonk (chief economist at Grant Thornton), said in a blog.
She pointed out that new vehicle prices rose by 1.2 percent in August, and increased by a staggering 7.6 percent compared to a year ago.
“Shortages in dealer inventories have become so severe that some smaller dealers are concerned about going out business.” She said that they can’t afford overhead costs without selling vehicles.
The Bureau of Labor Statistics reported that the food index rose 0.4% in August, following larger increases in the previous months. The index for meats and poultry rose 0.7% over the month. The beef index rose by 1.7%.
In August, the energy index saw a 2.2% increase, marking its third consecutive monthly rise.
The August gasoline index grew by 2.8%, which is faster than July’s growth of 2.4%.
Swonk stated that “the basics of food and energy cost are also high, which is crimping consumer finances.”
Swonk noted that energy prices will likely rise even more due to the destruction to refining plants following Hurricane Ida. This increases the commute costs for low-wage workers who can’t work at home.