US inflation rose a surprisingly stiff 3.7% in August as prices at the gas pump surged, adding pressure on the Federal Reserve as it weighs additional rate hikes this fall to tamp down prices.
The Consumer Price Index — a closely-watched measure of inflation that tracks changes in the costs of everyday goods and services — rose 0.6% in August versus a month earlier, according to data by the Bureau of Labor Statistics released Wednesday.
August’s acceleration is a 3.7% increase from 2022 — slightly ahead of the 3.6% increase that economists had expected, according to FactSet.
The latest number represents a stark slowdown from last summer when inflation hit a four-decade peak at 9.1%. Still, it remains well above the Fed’s 2% goal and marks an acceleration from the previous two months. In June, inflation bottomed out at 3%, and rose to 3.2% in July,
As Wall Street expected, rising gasoline costs were the main culprit of August’s advance, ticking 10.6% higher last month and accounting for over half of the increase, the data showed.
As of Wednesday, the national average for one gallon of gas is $3.85, according to AAA figures — two cents less than a month ago and four cents less than a year ago as oil prices hit a 10-month high.
“Pump prices appear to be defying the odds at the moment, despite the surge in the cost of oil,” said AAA spokesperson Andrew Gross.
The energy index rose 5.6% in August after increasing just 0.2% in July, the Bureau of Labor Statistics said.
Food prices rose 0.2% for the third consecutive month as the index for meats, poultry, fish, and eggs advanced 0.8% in August. The index for pork edged 2.2% higher.
Meanwhile, core CPI — which excludes volatile food and energy prices — rose 0.3% from a month ago, slightly more than the 0.2% monthly gain in June and July.
Shelter costs remained stubbornly high despite a cooling housing market, likely because of mortgage rates, which are sitting at the highest level since 2001 and forcing many homeowners in major US cities to sell at a loss.
The shelter index was the largest factor in rising core CPI, increasing 0.3% month over month.
Airline fares, personal care, and new vehicles also contributed to the rise of core CPI, as indexes for motor vehicle insurance also remained particularly strong.
The indexes for used cars and trucks and recreation decreased last month, the report said.
Economists are predicting that the slight increase in core inflation over the past three months sets up the Fed to hold interest rates steady next week following the central bankers’ highly-anticipated two-day meeting set for Sept. 19 and 20.
Whether Fed officials will raise its benchmark federal funds rate beyond its current range — between 5.25% and 5.5% — in November and December still remains up in the air.
At the Fed’s closely-watched meeting in Jackson Hole, Wyo., last month, Fed Chair Jerome Powell was hawkish in his tone on the still-stubbornly high inflation, though he remained vague on future rate hikes.
“We are navigating by the stars in cloudy skies,” Powell said from Jackson Lake Lodge, noting that Fed officials “will keep at it until the job is done” and the Fed’s 2% inflation goal is reached.
The central bank has worked to bring down stubbornly high inflation by hiking rates another 25 basis points to a 22-year high last month in hopes of an economic slowdown.
Though consumers have continued to feel a reprieve from the Fed’s aggressive tightening regime as inflation has eased from its 9.1% peak last June, the labor market has shown surprising resiliency over the last couple of months.
Employers have only recently begun to slow hiring.
In August, the economy added 187,000 jobs — the same amount as in July and the lowest number since COVID peaked in 2020.
In June, 209,000 jobs were added to the labor market, a slowdown from the massive 339,000 jobs added in May.
The US is currently enjoying a 31-month streak of monthly job gains.
𝗖𝗿𝗲𝗱𝗶𝘁𝘀, 𝗖𝗼𝗽𝘆𝗿𝗶𝗴𝗵𝘁 & 𝗖𝗼𝘂𝗿𝘁𝗲𝘀𝘆: nypost.com
𝗙𝗼𝗿 𝗮𝗻𝘆 𝗰𝗼𝗺𝗽𝗹𝗮𝗶𝗻𝘁𝘀 𝗿𝗲𝗴𝗮𝗿𝗱𝗶𝗻𝗴 𝗗𝗠𝗖𝗔,
𝗣𝗹𝗲𝗮𝘀𝗲 𝘀𝗲𝗻𝗱 𝘂𝘀 𝗮𝗻 𝗲𝗺𝗮𝗶𝗹 𝗮𝘁 dmca@enspirers.com
