A Modest Increase in the “Core” CPI in August

The CPI increased by 2.7% at a seasonally adjusted annual rate while the “core” CPI rose modestly in August.

The Consumer Price Index (CPI), reported by the Bureau of Labor Statistics (BLS), rose at a seasonally adjusted annual rate of 2.7% in August, after the 2.1% increase in July. Excluding the volatile food and energy components, “core” CPI increased at a seasonally adjusted annual rate of 1.0%, slower than the 3.0% increase in July.

The price index for a broad set of energy sources increased at a seasonally adjusted annual rate of 25.0% in August, after declines over June (-3.4%) and July (-5.9%). The index for shelter rose at a seasonally adjusted annual rate of 3.6% in August, after the 3.7% increase in July. Despite decreases in indexes for medical care, apparel, recreation, communication and personal care, increases in indexes for shelter and energy contributed to the increase in overall prices.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

In August, the real rent index rose at a seasonally adjusted annual rate of 3.4%, the fastest increase since April. In the first eight months of 2018, real rent inflation was at a seasonally adjusted annual rate of 1.4% on average, slower than the average of 1.9% in 2017.



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