United States: Inflation accelerates in August
September 11, 2020
Consumer prices rose 0.37% over the previous month in August, weaker than July’s 0.59% rise. The softer rise in consumer prices was mainly due to a smaller increase in prices for energy and shelter.
Inflation accelerated to 1.3% in August, from 1.0% in July. Meanwhile, core inflation increased to 1.7% in August from 1.6% in July. The core personal consumption expenditures price index—a gauge of household spending closely tracked by the Fed—ticked up to 1.0% in July, the latest month for which data is available, from 0.9% in June and moved slightly closer to the Fed’s 2.0% target.
Commenting on August’s inflation reading, Katherine Judge a senior economist at CIBC, noted:
“While this is the second month in a row of stronger-than-expected price pressures in the US economy, much of it appears to be attributable to temporary pops in demand upon services reopening, and rebounds in other components that plummeted during the lockdowns. The rate of annual inflation is still tame enough that the Fed won’t be concerned with this, especially considering its shift to average inflation targeting. The outlook for employment, and the next fiscal support package remain the most important factors in keeping the recovery on track.”
Author: Steven Burke, Economist