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August CPI Report Shows Inflation at a 3.4% Annual Rate, Above Forecasts

Core CPI at a 2.4% annual rate.

Illustration of capital building with bubbles of currency inflating

The Bureau of Labor Statistics reported that the Consumer Price Index increased 3.4% in August from year-ago levels after seeing the same 3.4% rate in July. Year-over-year core CPI (which excludes volatile food and energy costs) rose 2.4%, lagging the July rate of 2.5%. Overall inflation rose 0.4% month over month after rising 0.1% in July. Core inflation rose 0.3%, matching the July increase.

Economists expected CPI to rise 0.4% on a monthly basis and 3.3% year over year in August, according to consensus estimates from FactSet. Core CPI was expected to come in up 0.2% on a monthly basis and up 2.4% year over year.

August CPI Inflation Report Highlights

  • CPI rose 0.4% for the month after rising 0.1% in July.
  • Core CPI rose 0.3% after rising 0.2% in July.
  • CPI increased 3.4% year over year after the same 3.4% rate the prior month.
  • Core CPI rose 2.4% from year-ago levels after it rose 2.5% in July.

Food prices increased 0.1% in August after increasing 0.1% in July. Grocery prices were unchanged, while restaurant prices increased 0.3%. Overall energy prices increased 2.1% after falling 1.5% last month, while utility gas prices fell 1.1%, fuel oil prices increased 10.1%, gasoline prices rose 3.9%, and electricity prices decreased 0.2%. Shelter prices rose 0.3% in August after rising 0.1% in July.

What Is the CPI?

The Consumer Price Index is a mainstream measure of inflation that tracks changes in consumer prices for a wide variety of goods and services, including food, housing, healthcare, and energy.

Investors widely follow the CPI report, but it isn’t the only way to track inflation. When it comes to the Federal Reserve’s decisions on interest rates, the focus is generally on the Personal Consumption Expenditures Price Index. The Fed targets a 2% inflation rate based on the PCE Index. However, the CPI generally makes front-page news because it is released earlier than the PCE and contains much of the same information. Both reports are released monthly.

This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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