Consumer Prices Rose 0.4% in August

People shop at Macy's Department store in New York

Used cars drive U.S. consumer price index higher

Nonetheless, despite a modest gain in the purchases of consumer goods and services in August, analysts fretted that the consumer prices had been slowing down following large gains of 0.6 per cent in both June and July, however, a curb in oil futures' prices had also led to the slowdown in United States consumer prices.

The Labor Department said on Friday its consumer price index rose 0.4% last month.

According to the report, the inflation rate August rose by 0.13% compared to July 2020.

Policymakers have expressed a range of ideas about how this might work in practice, but agree the aim is to let prices rise fast enough that households and businesses take their inflation target seriously.

However, there were still areas which showed bigger price increases, led by a 5.4% jump in used vehicle prices, the biggest monthly gain since March 1969. The CPI climbed 0.4% from the prior month following a 0.6% advance. Economists polled by Reuters had forecast the CPI rising 0.3% in August and climbing 1.2% year-on-year. Additionally, Fed Chair Jerome Powell said late last month that the central bank will now be seeking an average inflation target, implying price pressures can overshoot after periods of weakness. A 5.4 per cent surge in the cost of used cars and trucks accounted for more than 40 per cent of the gain in the core index. In the early months of the pandemic, prices for things such as airfare and hotels collapsed as Americans stayed home.

Food costs edged up a modest 0.1% in August after having fallen 0.4% in July.

The food and non-alcoholic beverages group witnessed a price rise by 0.40 per cent; health by 0.29 per cent; and education by 2.21 per cent.

Consumers paid less for beef as its price dropped 4.4%.

USA crude inventories rose 2 million barrels, compared with forecasts for a 1.3 million-barrel decrease in a Reuters poll. Prices for household furnishings and operations rose 0.9%, the largest increase since February 1991, likely due to more people working from home. The prices of furnishings, household equipment, and routine household maintenance also rose by 0.23%.

Healthcare costs gained 0.1% after rising 0.4% in July. But prescription medication prices fell 0.2%. New vehicle prices were unchanged. Many schools and universities have shifted to online classes because of the pandemic.

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