CPI Growth Slows in August


In August, consumer prices increased at its slowest pace since February 2021. Prices for several travel-related categories declined in August, as the delta variant spreads.

The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.3% in August on a seasonally adjusted basis, following an increase of 0.5% in July. Excluding the volatile food and energy components, the “core” CPI increased by 0.1% in August, the smallest monthly increase in the past six months. In August, the indexes for used cars and trucks (-1.5%), motor vehicle insurance (-2.8%) and airline fares (-9.1%) declined.

The index for shelter, made up more than 30% of the headline CPI, rose by 0.2% in August. The index for owners’ equivalent rent (OER) increased by 0.3% over the month, while the index for lodging away from home declined by 2.9%.

Meanwhile, the price index for a broad set of energy sources increased by 2.0% in August, after a 1.6% increase in July. Gasoline (all type) rose by 2.8% in August, following a 2.4% increase in July. The food index rose by 0.4% in July, slower than a 0.7% increase in July. The indexes for food at home and food away from home both rose by 0.4% in August.

During the past twelve months, on a not seasonally adjusted basis, the CPI rose by 5.3% in August, following a 5.4% increase in July. The “core” CPI increased by 4.0% over the past twelve months, slower than a 4.3% increase in July. The food index rose by 3.7% and the energy index rose by 25.0% over the past twelve months.

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).

The Real Rent Index rose by 0.2% in August, after five consecutive declines. Over the first eight months of 2021, the monthly change of the Real Rent Index was -0.2%, on average.

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