In August, headline inflation rose slower relative to July, while core inflation remained unchanged.
The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.1% on a seasonally adjusted basis in August, slower than the 0.3% increase in July. Excluding the volatile food and energy components, the “core” CPI increased by 0.3% in August, the same increase as in the previous two months (June and July). The August increase in the “core” CPI reflected increases in the indexes for shelter (0.2%), medical care (0.7%), apparel (0.2%), recreation (0.5%), used cars and trucks (1.1%) and airline fares (1.7%). The index for new vehicles declined by 0.1% over the month.
The price index for a broad set of energy sources declined by 1.9% in August, after a 1.3% increase in July. Meanwhile, the food index was unchanged for the third consecutive month. Given the unchanged food index, the decrease in energy prices mainly accounted for the gap between headline inflation and core inflation.
The figure below shows monthly changes in the CPI, the “core” CPI, energy prices and the food index in July and August.
Over the past twelve months, on a not seasonally adjusted basis, the CPI rose by 1.7% in August, following a 1.8% increase in July. Meanwhile, the “core” CPI increased by 2.4% over the past twelve months, after a 2.2% increase in July. It was the largest gain since July 2018 on a year-over-year basis. The food index rose by 1.7% over the past twelve months while the energy index declined by 4.4%.
Ok, all the media can talk about is how the tariffs on Chinese goods is hurting the American consumer who they say are the ones paying higher prices to cover the additional taxes. If that is the case, where is the inflation to prove that allegation?