United States Inflation August 2019

United States

United States: Inflation eases in August

September 12, 2019

Consumer prices rose 0.1% over the prior month in August, down from the 0.3% increase registered in July. The weaker print matched market expectations and was driven by a sharp drop in energy prices, particularly for gasoline. That said, core consumer prices—which exclude volatile items such as food and energy—rose 0.3% in August for the third month in a row, reflecting sharp price jumps in medical care services and still-strong rental costs.

Inflation softened to 1.7% in August from 1.8% in July, which also met market expectations. On the other hand, core inflation accelerated to 2.4% in August from 2.2% in July. Meanwhile, the personal consumption expenditures price index—a separate gauge that is closely monitored by the Fed—remained below the Bank’s 2.0% target at 1.6% in July, the latest month for which data is available.

August’s inflation reading comes just days before the Fed’s next FOMC meeting, in which the majority of FocusEconomics panelists expect the Bank to deliver a second 25 basis-point rate cut. Commenting on stronger core price pressures and how ties in with the impact of tariffs on the Fed’s deliberations, Leslie Preston, senior economist at TD Economics, noted:

“Prices for a host of goods, which are typically imported, have been trending up since tariffs were increased. This is likely to continue with the latest round of import tariffs on China coming into effect in September. The Fed will treat price increase due to tariffs as a tax, which slows growth, and not as an indication of accelerating price pressures economy-wide. Therefore, there is little in August's inflation data to prevent the FOMC from cutting rates at their meeting next week.”

FocusEconomics Consensus Forecast participants expect inflation to average 1.8% in 2019, which is down 0.1 percentage points from last month’s forecast. For 2020, the panel expects inflation to average 2.0%.


Author:, Economist

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United States Inflation August 2019

Note: Year-on-year and month-on-month variation of seasonally-adjusted consumer price index in %.
Source: Bureau of Labor Statistics.


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