The Consumer Price Index increased 0.6 percent in August, faster than the July rate of 0.2 percent, according to data released Wednesday.
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Inflation ticked up in August, with increases in the cost of housing and gasoline leading the charge.
The Consumer Price Index increased 0.6 percent in August, faster than the July rate of 0.2 percent, according to data released Wednesday by the Bureau of Labor Statistics.
The index for gasoline accounted for over half of the monthly increase, while the index for shelter increased 0.3 percent during August and was up 7.3 percent from a year ago and the index for rent prices was up 7.2 percent.
“Housing continues to contribute an outsized share to the inflation measures, with the rent index up by 7.2 percent in August, rising for the 40th consecutive month,” Bright MLS Chief Economist Lisa Sturtevant said in a statement. “In fact, if shelter is excluded from the CPI calculation, inflation was about 1 percent.”
Sturtevant noted that rent growth has decreased in recent months, which is yet to be reflected by the CPI.
“Rent growth has slowed considerably and median rents nationally fell year-over-year in August,” she said. “However, it takes months for those aggregate rent trends to show up in the CPI measures, which the Fed must take into account when it takes its ‘data driven’ approach to deciding on interest rate policy at their meeting of the FOMC later this month.”
The CPI was up 3.7 percent on an annual basis, an increase from the 3.2 percent annual increase recorded in July, taking the metric further away from the Federal Reserve’s goal of 2 percent annual inflation. Federal Reserve officials signaled, however, during their meeting last week, that they were prepared to hold off on further interest rate increases, with Wednesday’s numbers unlikely to change that outcome.
Federal Reserve Chair Jerome Powell hammered home the body’s current “higher for longer” philosophy during a speech at the annual Jackson Hole central banking symposium in August but maintained that another rate hike may still be necessary to reach the central bank’s 2 percent inflation target.
Mortgage interest rates of 7 percent have brought the United States housing market to a near-standstill, with the vast majority of would-be sellers unwilling to list their homes for sale and lose their lower interest rates. Approximately 91.8 percent of homeowners with mortgages are paying less than 6 percent interest, 82.4 percent have a rate below 5 percent, 62 percent enjoy a rate below 4 percent, and 23.5 percent boast a rate below 3 percent, according to data from Redfin.