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The U.S. consumer price index (CPI) for August rose 3.7% year-over-year, according to the Depart of Labor, with the increase largely accounted for by a spike in gasoline prices, while CPI data overall showed a decrease in inflation.
The August CPI data is up from a 3.2% increase in July, year-over-year.
Core CPI prices, which exclude food and energy, rose 4.3%, down from 4.7% in July, though still more than double the Federal Reserve’s target of 2%. While this is the biggest monthly jump in inflation since January, it does not reflect what is only a slight increase in the core CPI.
"The move higher in headline inflation is a head-fake since it was mostly driven by a huge 10.5% jump in energy commodity prices," Reuters cited Brian Jacobsen, chief economist at Annex Wealth Management in Wisconsin, as saying on Wednesday.
The August CPI data has analysts largely expecting that the Fed will forego another interest rate hike when it meets next week, with most economic forecasts showing a gradual decline in inflation for the remainder of the year.
“It’s pretty clear that inflation has been coming down, both on a headline and core basis,” Eric Winograd, chief economist and strategist at AllianceBernstein, told Morningstar. “But getting to the Fed’s long-term goal is going to take time.”
Current national gas prices per gallon are averaging $3.848, the same as the average a month ago, but up from $3.803 a week ago, according to AAA. A year ago, the national average per gallon was $3.707, while the highest recorded national average was $5.016 in June 2022.
According to the Department of Labor, food prices rose 0.2% and shelter costs rose 0.3% in August.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com