According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate was 2.7 % year-over-year (lower than the 2.9 % last month) – up 0.2 % month-over-month. The year-over-year core inflation (excludes energy and food) rate moderated from 2.4 % to 2.2 % and continues to be above the target set by the Federal Reserve.
Analyst Opinion of the Consumer Price Index
Energy was the main driver for year-over-year inflation. Core inflation remains above 2.0 % year-over-year.
The market expected (from Nasdaq / Econoday):
As a generalization – inflation accelerates as the economy heats up, while inflation rate falling could be an indicator that the economy is cooling. However, inflation does not correlate well to the economy – and cannot be used as an economic indicator.
The major influence on the CPI was energy.
Increases in the indexes for shelter and energy were the main contributors to the seasonally adjusted monthly increase in the all items index. The energy index increased 1.9 percent in August; a 3.0-percent increase in the gasoline index was the largest factor, but the other energy component indexes also rose. The shelter index increased 0.3 percent in August, the same increase as in July. The food index rose only slightly in August, with the index for food at home unchanged. The index for all items less food and energy rose 0.1 percent in August, the smallest monthly increase since April. Along with the shelter index, the indexes for airline fares and used cars and trucks were among those that increased in August. An array of indexes declined, including apparel, medical care, communication, recreation, and personal care. The all items index rose 2.7 percent for the 12 months ending August, a smaller increase than the 2.9 percent increase for the 12 months ending July. The index for all items less food and energy rose 2.2 percent for the 12 months ending August and the energy index increased 10.2 percent; these were both smaller increases than for the 12 months ending July. The food index increased 1.4 percent over the last 12 months, the same increase as for the period ending July.
