August's Consumer Price Index (CPI) climbed 0.6% from the previous month and 3.7% from last year, driven by rising oil prices. This marks an increase from July's 0.2% monthly and 3.2% annual price growth. The year-over-year rise slightly exceeded economist predictions of 3.6%, per Bloomberg data.
The main driver of these increases was a substantial surge in energy prices. Oil prices reached new highs for the year, with West Texas Intermediate (WTI) just below $89 per barrel and Brent crude futures above $92 per barrel, marking the highest levels since November 2022.
When looking at "core" inflation, which excludes the more volatile costs of food and gas, prices in August increased by 4.3% compared to the previous year. This represents a slight deceleration from July's 4.7% annual increase. Monthly core prices also saw a 0.3% rise, slightly exceeding economist predictions of a 0.2% month-over-month increase and surpassing July's 0.2% monthly uptick, according to Bloomberg data.
On a 12-month unadjusted basis, the energy index declined by 3.6% through August. However, on a seasonally adjusted month-over-month basis, energy prices surged by 5.6%, a significant jump from July's 0.1% increase.
Gas prices saw a notable increase of 10.6% in August, following a modest 0.2% rise in the previous month.
Regarding core inflation, rent prices remained on an upward trajectory, with rent and owners' equivalent indexes rising by 0.5% and 0.4% on a monthly basis, respectively. Owners' equivalent rent represents the hypothetical rent a homeowner would pay.
The shelter index played a pivotal role in the monthly core inflation increase, growing by 0.3% month-over-month and 7.3% annually. These figures, however, showed a slight decrease compared to July's 7.7% annual gain and 0.4% monthly rise.
In August, other indexes that experienced increases included motor vehicle insurance, medical care, and personal care, as highlighted by the Bureau of Labor Statistics (BLS).
Indexes for lodging away from home, recreation, and used cars and trucks declined during the month. Used cars and trucks witnessed a 1.2% drop in prices in August, following a 1.3% decline in July.
In the food sector, prices increased by 4.3% in August compared to the previous year, with a 0.2% rise from July to August. The food at home index also increased by 0.2% during the month, following a 0.3% increase in July.
Within the food category, the index for meats, poultry, fish, and eggs climbed by 0.8% in August, notably driven by a 2.2% increase in the pork index. Additionally, the index for other food at home rose by 0.2%, while cereals and bakery products saw a 0.5% increase, according to the BLS.
Egg prices, however, continued to decline, dropping by 2.5% month-over-month in August, following decreases of 2.2% in July and 7.3% in June.
Following the data release, US stocks dipped in early trading, and Treasury yields surged by about 9 basis points, reaching around 4.3%.