Consumer Price Index Showing Some Life

The CPI showed some life in August. The data suggest that price pressures are picking up slightly after stalling in July. August CPI increased a more than expected 0.2 percent on the month and was up 1.1 percent from a year ago. The headline CPI was unchanged in July.

The core CPI also was up a more than anticipated 0.3 percent and 2.3 percent on the year. The energy and food indexes were both unchanged in August. Major energy components were mixed, with increases in the indexes for natural gas and electricity offsetting declines in the gasoline and fuel oil indexes. The food at home index declined for the fourth month in a row, offsetting an increase in food away from home.

The 0.3 percent increase in the core index was the largest rise since February 2016. Along with shelter and medical care, motor vehicle insurance, apparel, communication, and tobacco all increased. The medical prices index showed a substantial increase, driven by higher hospital services costs and prescription prices. In contrast, used cars & trucks, household furnishings & operations, recreation, and airline fares all declined in August.

The uptick in inflation is likely to be welcomed by Fed officials when they meet next Tuesday and Wednesday to deliberate on monetary policy.

Recent History Of This Indicator:
Consumer prices have been stubbornly flat and yet to show any effect from sporadic signs of pressures in import prices and producer prices. The CPI was unchanged in July following two prior months of only 0.2 percent gains. The less food & energy core reading has been little better, rising 0.1 percent in July and also following two 0.2 percent gains. Transportation costs have been coming down and most goods prices, including for food and apparel, have been flat. What strength there is continues to be centered in medical care and, to a lesser extent, housing