Consumer price growth slowed more than expected despite a rise in shelter costs, according to the latest consumer price index.
- Consumer prices rose 0.2% in August, matching July’s increase and marking the third-best month of 2023 for price stability.
- Year-over-year inflation slowed to 2.5%, surpassing economists’ expectations of 2.6%, the lowest level since February 2021.
Food & Energy: The food index grew just 0.1% in August, down from 0.2% in July, contributing to a 2.1% rise in food prices year-over-year, the slowest rate since May.
- Energy prices dropped by 0.8%, after no change in July, marking the third decline in the last four months. On an annual basis, energy prices are now down 4.0%.
Core inflation, which excludes food and energy, rose 0.3% in August, slightly hotter than anticipated and the highest increase since April. Year-over-year core inflation held steady at 3.2%, its lowest level since April 2021.
- Used car and truck prices continued to plummet, falling 1.0% in August after a 2.3% drop in July. Prices are down 10.4% year-over-year.
Shelter Costs Rise: Unfortunately, shelter costs surged 0.5% in August, up from 0.4% in July, the largest monthly increase since January. Annual shelter inflation rose to 5.2%, the first uptick in the index since early 2023.
Why it matters: While overall inflation is easing, core inflation and rising shelter costs remain key concerns. These underlying pressures could complicate the Federal Reserve’s efforts to bring inflation down to its 2% target.
