U.S. Consumer Prices Broadly Rebounded in August

Consumer-price index rose 0.4 %, marking the third straight month of gains

By  guest author Amara Omeokwe from Wall Street Journal

Cation and graphics courtesy by Wall Street Journal

U.S. consumer prices rose in August due to higher costs for a range of items, a sign of firmer inflation as demand for goods continues to rebound from a coronavirus pandemic-induced downturn earlier this year.

The consumer-price index—which measures what consumers pay for everyday items including groceries, clothing and electricity—climbed a seasonally adjusted 0.4 % in August, the Labor Department said Friday. That marked the third straight month of gains for consumer prices, after sharp declines at the pandemic’s onset.

Excluding the often-volatile categories of food and energy, so-called core prices increased 0.4 %. Economists surveyed by The Wall Street Journal expected a 0.3 % increase for both the overall consumer-price index and the core index.

The bounceback in consumer prices over the summer came as states reopened their economies and weathered a resurgence in coronavirus cases. Prices for certain goods have rebounded especially well, reflecting a shift in consumer habits and preferences amid the pandemic, as well as continued business disruptions and adaptations in many industries.

Slow GrowthInflation has started to rebound, but remainsbelow 2 %. Change from a year earlier in consumerprices for urban consumersSource: Labour Department,

Used-vehicle prices, for example, rose 5.4 % in August, accounting for 40 % of the increase in core prices, the Labour Department said. Sales of used cars and trucks have increased during the pandemic due to several factors, including limited supply of new vehicles because of factory closures during the spring.

Prices for gas, shelter, and apparel also moved higher last month. Notably, prices for food at home fell slightly by 0.1 % over the month, the second consecutive decline. Grocery prices posted strong increases in February through June as people stayed at home.

Longer-term trends suggest inflationary pressures are muted. On a non-seasonally adjusted basis, the overall consumer-price index rose 1.3 % in August from a year earlier and core prices increased 1.7 % over the year. The Federal Reserve, acknowledging that inflation has mostly remained below its 2 % target for several years, recently changed its policy framework to no longer pre-emptively lift interest rates to prevent higher inflation.