US consumer prices rose 0.3% below expectations last month, the smallest monthly increase in seven months and a hopeful sign that inflationary pressures may be cooling.
WASHINGTON — US consumer prices rose 0.3% last month, the smallest increase in seven months, and a hopeful sign that the recent surge in inflation may be cooling.
The Labor Department reported Tuesday that August’s profit was weaker than a 0.5% increase in July and a 0.9% increase in June. It was the smallest increase since the 0.3% increase in prices in January.
While price increases appear to have eased over the past month, economists caution that the same underlying reasons remain. The supply chain is still stuck especially for critical components like computer chips. Consumer demand is easily outpacing supply, which will drive prices up.
Over the past 12 months, prices are up 5.3%, slightly below the two-month average of 5.4%, the strongest 12-month price gain since 2008.
Republicans have attacked the Biden administration for this year’s increase in prices, but administration officials have insisted that the jump in prices will be temporary and price gains begin to return to more normal levels, with supply chains recovering. economies take hold.
For August, food prices rose 0.4%, a marginal decrease after gains of 0.8% and 0.7% in the previous two months.
Tuesday’s report has some evidence to suggest that the increase in COVID-19 cases due to the delta variant may have contributed to the slowing of price gains, particularly in areas such as travel. Airline fares fell 9.1% in August, while hotel room rates fell by 2.9% and rental car prices by 8.5%.
Prices of used cars, which had been rising due to reduced supply, fell 1.5% in August, but new car prices rose 1.2%, reflecting supply-chain problems that still remain to be achieved by semiconductor distribution. are facing the automakers trying to.
The overall increase of 0.3% was below the consensus view that prices would rise by 0.4% in August. Analysts said a lower-than-expected reading should ensure the Federal Reserve leaves its ultralow interest rate policies unchanged at next week’s meeting. But analysts said the report does not change the view that the Fed will announce plans to reduce its monthly bond purchases at the Fed’s November meeting later this year.
“Inflation readings are high enough for the Fed to move away from emergency aid, perhaps later this year, even with some moderation in labor market recovery,” said Rubila Farooqui, chief US economist at High Frequency Economics. also with.”