United States: Inflation bounces back in August
September 14, 2012
In August, consumer prices added 0.6% over the previous month in seasonally adjusted terms. The figure, which represents the largest monthly gain in over three years, was up from the flat reading recorded in July but just in line with market expectations. The figure mainly reflected a surge in energy prices (+5.6% month-on-month), in particular for gasoline. As a result of the hefty monthly figure, annual headline inflation rose from 1.4% in July to 1.7% in August. Meanwhile, the closely monitored core inflation index, which excludes food and energy, added 0.1% over the previous month (July: +0.1% mom), undershooting market expectations of a 0.2% rise. As a result, annual core inflation moderated from 2.1% in July to 1.9% in August, its lowest level in over a year. Annual average inflation over the previous 12 months inched down to 2.6% from 2.7% in July. The Federal Reserve expects PCE inflation (based on the price index for personal consumption expenditures) to average between 1.7% and 1.8% this year. For 2013, the Fed anticipates PCE inflation to range between 1.6% and 2.0%.