The United States’ Consumer Price Index (CPI report) for August released today reflected a mixed picture of the nation’s economy showing that while the overall inflation rate has moderated year-on-year, underlying price pressures remain evident, particularly in the housing market.
The Consumer Price Index report by the U.S. Bureau of Labor Statistics showed that All Urban Consumers (CPI-U) held steady at 0.2% in August, while the year-on-year inflation rate declined to 2.5%, indicating a deceleration in overall price increases.
The Bureau disclosed that Shelter expenses were the largest contributor to inflation, with the shelter index rising by 0.5%, driving the overall inflation rate upward, compared to Food prices, which remained relatively stable, with a marginal increase of 0.1% during the month.
Similarly, the report indicated that Energy costs reduced by 0.8% in August, offering some respite to consumers, clarifying, however, that Core Inflation, excluding food and energy, rose by 0.3%, indicating that underlying inflationary pressures persist.
Reflecting on the latest CPI of the U.S, researchers at Comercio Partners, an investment research and economic consulting firm, believe that while the headline inflation rate remains relatively low, underlying pressures could reignite price increases.
In addition, they pointed out that the new data report could influence the Federal Reserve’s decision on interest rates, stressing that if core inflation remains elevated, the Fed may need to continue raising rates to combat inflation.
However, the analysts predicted that lower inflation can boost consumer spending, but the ongoing tightness in the housing market could limit overall economic growth.
On the outlook of the nation’s economy, they predicted: “The overall economic outlook remains uncertain. While the inflation rate is moderating, there are risks of a resurgence, particularly if supply chain disruptions or geopolitical tensions worsen.”
