Inflation rose significantly in August, marking the second month in a row that inflation has ticked up, according to the latest Bureau of Labor Statistics (BLS) release on Wednesday.
The Consumer Price Index (CPI), a broad measure of the prices of everyday goods, increased 3.7% on an annual basis in August, compared to 3.2% in July, according to the BLS. Core CPI, which excludes the volatile categories of energy and food, remained high, rising 4.3% year-over-year in August, compared to 4.7% in July.
“This will be the second acceleration in a row, showing that inflation is anything but dead,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the Daily Caller News Foundation. “Although we’ve been told that inflation has been trending back towards 2%, that’s false. If anything, the annualized monthly data show it was trending towards 3% and is now climbing again.”
The rise in inflation was partly driven by an increase in the price of gasoline, accounting for half of the total gain, with the energy index rising 5.6% for the month. The second largest contributor to the increase was the price of shelter, which has risen for the past 40 months in a row.
The Federal Reserve, in an attempt to lower inflation, has raised its federal funds rate to the highest point since 2001 after a series of 11 rate hikes, bringing the current rate to a range of 5.25% and 5.50%. The Fed will announce on Sept. 20 whether it will raise rates again at the conclusion of its Federal Open Market Committee meeting.
Real median household income down 2.3% in 2022; poverty level and rate were flat Y/Y; supplemental poverty measure jumped 4.6 percentage points: pic.twitter.com/e30ns3jrBL
— E.J. Antoni, Ph.D. (@RealEJAntoni) September 12, 2023
Jerome Powell, chair of the Fed, hinted in August at the Jackson Hole Economic Symposium that the Fed will raise rates if factors like high inflation, a hot labor market and sustained growth continue.
The job market has cooled in recent months, with August only adding 187,000 new nonfarm payroll jobs. The number of jobs added for June and July were both revised down to reflect further softening, adding 80,000 and 30,000 fewer than was previously reported, respectively.
GDP grew less than previously thought for the second quarter of 2023, with the economy growing 2.1% instead of the 2.4% that was originally reported.
“I expect the Fed will continue with a combination of pauses and 25-basis-point hikes for several more months, while continuing to slowly run off the balance sheet,” Antoni told the DCNF. “To put the inflation of the last two and a half years in perspective, roughly all of the household net wealth generated over that time has been confiscated by the government through the hidden tax of inflation.”
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