The consumer-price index fell 0.1 percent, the first decrease since January, after a 0.1 percent gain in July, Labor Department figures showed Wednesday. Lastly medical care costs, which should be on the rise due to increased demand, showed no change over the prior month. Airfares were down by 3.1%, not including fees at least.
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Core CPI (excluding food and energy) rose 0.1%, also on par with the consensus view.
USA consumer prices unexpectedly fell in August as gasoline prices resumed their decline and a strong US dollar curbed the cost of other goods, pointing to tame inflation that complicates the Federal Reserve’s decision whether to hike interest rates. However, airline fares fell 3.1 per cent and used auto prices declined for a fourth straight month. Food prices gained 0.2% as egg prices increased 7.7%. Over the past 12 months, overall prices are up just 0.2 per cent, while core inflation is up a modest 1.8 per cent. The food index rose 0.2% in August, led by fruits and vegetables gaining by 1.5%. Still, energy prices are down 15% over the past year.
The Office of National Statistics reported Wednesday that pay including bonuses also rose by 2.9 percent.
Fed officials have said they expected the effects of lower oil prices to be temporary.
The tightening jobs market, marked by all time high job openings and an unemployment rate of 5.1%, have thus far not helped to spur on a faster growth in wages.
But inflation might not be as low as it appears. That measure showed prices up 0.3% for the 12 months ended July 31, the most recent data available.
Economists polled by Reuters had forecast the CPI unchanged in August and rising 0.2 per cent from a year ago. That’s more than three years that inflation has plodded below the Fed’s 2 percent target.
Although the Fed’s preferred measure of inflation is the personal consumption expenditures index, today’s reading provides insight into whether inflation is still going nowhere, and the slow pace is truly transitory, as Fed chair Janet Yellen has said.
The hot rental market is helping to fuel home building activity, with a separate report on Wednesday showing homebuilder confidence near a decade high in September.
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From a year earlier, real average weekly earnings rose 2.3 per cent and hourly earnings rose 2 per cent.
