CUNA Economics: Prices Jumped in August

Credit Union National Association (CUNA) Senior Economist Dawit Kebede, PhD, issued the following statement in response to the Labor Department’s August Consumer Price Index Report:

“The headline inflation over the past 12 months increased by 3.7% in August, faster than the 3.2% increase in July due to high gas prices. Gas prices were 11% higher in August.  Core inflation – which excludes volatile gas and food prices – slowed down to 4.3% from 4.7% in July, relative to a year ago.   

“Core prices also ticked up slightly higher on a monthly basis by 0.3% after two consecutive months of 0.2% increase in June and July. This is equivalent to a 2.8% percent annualized increase based on average price growth of the last three months. It indicates core inflation is still trending down in the right direction to the Federal Reserve's target despite the slight uptick in August. 

“The Federal Reserve is expected to hold rates steady when they meet later this month. Recent labor market reports indicate a better balance in labor demand and supply as hiring slowed down and labor supply increased, raising the unemployment rate higher. There is nothing in this inflation report that will prompt the Federal Reserve to increase rates during their next meeting.”