The United States Consumer Price Index (CPI) figures for August of this year reflected a year-on-year increase of 2.5%, a rate slightly below the median forecast and the lowest since 2021. On a monthly basis, the recorded increase was 0.2%, consolidating a trend of decelerating price growth compared to recent years.
The Bureau of Labor Statistics (BLS) reported last Wednesday that the Underlying Consumer Price Index, which excludes food and energy due to their volatility, posted a 0.3% increase compared to July, while year-over-year it rose 3.2%, in line with market expectations.
United States CPI: What is the inflation rate for August 2024?
The Department of Labor reported that the year-over-year Consumer Price Index (CPI) in August was 2.5%, down from 2.9% in July. This decline in the CPI represents the lowest figure since February 2021, marking a moderating trend in inflation.
The reduction in the CPI reflects efforts to contain price increases following previous inflationary peaks, and shows signs of stabilization in price behavior at the national level. Despite these advances, the index continues to be a key indicator for monitoring the state of the economy.
The monthly inflation rate rebounded by 0.2% after the decline recorded in June, meeting market expectations. In response to these results, the White House issued a statement affirming that the country “is turning the page on inflation”, highlighting the stabilization in price increases after months of economic concern.
August marked the fifth consecutive month of decline in the year-on-year average, with specialists attributing this result in part to the 10.3% drop in gasoline prices, which contributed to a 4% decrease in energy prices.
On the other hand, the high stagnation of the underlying figure is related to the behavior of the housing index , which increased by 5.2% in the last year, accounting for more than 70% of the total increase in core inflation in said period, according to NA.
Other items that contributed significant increases in the last year were motor vehicle insurance (+16.5%), medical care (+3.0%), recreation (+1.6%) and education (+3.1%).
Food, on the other hand, recorded a lower increase than the average, rising 2.1% year-on-year, mainly due to the containment of those consumed at home (+0.9% year-on-year), compared to the increase in those consumed outside the home (4%).
US inflation: What will happen with Fed interest rates?
The CPI data will be analyzed in detail by the Federal Reserve (Fed), which will hold a monetary policy meeting on Tuesday and Wednesday of next week.
Specialists believe that the August inflation will allow the interest rate cut to be lower. It is worth mentioning that the agency plans to cut interest rates by 25 to 50 basis points.
A rate cut by the U.S. central bank would act to boost demand in the world’s largest economy. That would give the Democratic Party some good economic news moving into the final stretch to the November 5 presidential election.
What is the Consumer Price Index?
The Consumer Price Index (CPI) is responsible for measuring the variation in the prices consumers pay for a wide range of goods and services in the market. This index is a key tool for analyzing the evolution of the cost of living, as it allows identifying changes in the prices of daily consumer products, such as food, transportation, housing and health care, among others. In addition, it is a fundamental reference to determine the impact of inflation on the purchasing power of citizens.
The CPI also reflects the spending patterns of salaried urban consumers and administrative workers, making it a representative indicator of a significant part of the population. By observing how prices affecting these sectors vary, the CPI helps to assess economic trends and adjust economic and wage policies. It is a fundamental indicator in decision making for both governments and financial institutions, and its detailed analysis makes it possible to address fluctuations in the cost of living.