Inflation soared in August, mainly due to higher gasoline prices, according to data released by the Labor Department on Wednesday.
The Consumer Price Index (CPI), a key measure of inflation, rose 0.6% last month and 3.7% over the past year, in line with economists’ expectations. Gasoline prices accounted for more than half of the month’s overall increase in inflation, the Labor Department said.
Steady increases in shelter prices also pushed up overall inflation, which rose for the 40th straight month, according to the Labor Department.
Energy prices tend to rise during the summer months as Americans travel more and use more electricity to cool their homes. Gasoline prices rose 10.6% in August, but were down 3% from the same period in 2022.
Rising gas prices may not be cause for alarm, but the steadily rising costs of shelters and other services could alarm Federal Reserve officials.
“While the rise in top-line inflation was expected, given the Fed’s focus on the more robust components of the index, the monthly increase in “The slight rise in core inflation is a cause for some concern.”
“The report was not without some positive signs towards cooling inflation. Core commodity prices continue to decline and the index’s largest component, the haven, is at its lowest since 2021. We recorded an increase.”
Fed officials are considering whether to keep rates unchanged at next week’s policy meeting or raise rates to maintain inflationary pressures.
The annual inflation rate has fallen sharply since peaking at 9.1% in June last year, and the US economy is showing signs of weakening amid high interest rates.
“After easing since last summer, energy prices spiked again in August, reigniting inflation and casting doubt on the prospects for a September rate hike pause and soft landing,” Julia Pollack, chief economist at ZipRecruiter, said in an analysis. “This occurred,” the analysis said.
Updated at 9:33am