April 27, 2024
WASHINGTON (AP) — A spike in gas prices pushed up inflation in August, yet most other costs rose at a more modest pace, evidence that price increases overall are still cooling.
In a set of conflicting data released Wednesday, the Labor Department said the consumer price index rose 3.7% in August from a year ago, up from a 3.2% annual pace in July. Yet excluding the volatile food and energy categories, so-called core prices rose 4.3%, a step back from 4.7% in July and the smallest increase in nearly two years. That is still far from the Federal Reserve’s 2% target.
On a monthly basis, consumer prices jumped 0.6% in August, the biggest increase in more than a year. Gas prices spiked nearly 11% in August, though they have since levelled off: According to AAA, the average nationwide price at the pump was $3.84 on Tuesday, little changed from a month ago.
Energy costs rose 5.6% just in August, the biggest monthly increase since June 2022. Auto insurance prices also soared, rising 2.4% last month and 19.1% compared with a year ago.
Federal Reserve chair Jerome Powell said last month inflation was still “too high.”
But in his high-profile speech at Jackson Hole, Powell said that the Fed would proceed “carefully” with any further rate hikes, which many economists saw as an opening for the Fed to skip a rate increase at its September 19-20 meeting. When the Fed increases its key rate, it typically raises the cost of mortgages, auto loans, and business borrowing.
The Fed has lifted its benchmark interest rate 11 times in the past 12 meetings to about 5.4%, the highest level in 22 years. It increased the rate a quarter-point in July after leaving it unchanged in June.
Lorie Logan, president of the Federal Reserve’s Dallas branch, said last week that “another skip could be appropriate” at its next meeting, “but skipping does not imply stopping.”
