August Inflation Breakdown: Where Are Prices Hitting Americans the Most?

Inflation rose more than expected in August, as rising food and rent costs offset a significant drop in gasoline prices.

The Labor Department said Tuesday that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries and rent, rose 8.3% in August from a year earlier. Prices rose 0.1% in the one-month period from July.

Those numbers were higher than the 8.1% headline figure and 0.1% monthly decline predicted by Refinitiv economists, a worrying sign for the Federal Reserve as it seeks to cool price gains and tame consumer demand with an aggressive campaign to raise interest rates. Stocks sank on the surprisingly positive report, with the Dow Jones Industrial Average shedding more than 1,000 points on Tuesday afternoon.

So-called core prices, which strip out the more volatile measures of food and energy, rose 6.3% from a year earlier, above the 6.1% forecast by economists. Core prices also rose more than expected on a monthly basis, jumping 0.6% in August, a larger increase than in April, May, June and July, and a worrying sign that core prices inflationary pressures in the economy remain strong.

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“The CPI report for August indicates that inflation is still very high,” said Jason Reed, deputy chairman and professor of finance at the University of Notre Dame’s Mendoza School of Business. “Economists were expecting a cooldown during August and saw it with significant drops in gas and energy prices, but food and health care prices remained high.”

Here’s a breakdown of where Americans are seeing prices rise the fastest, and where there has been relief from higher inflation, as they struggle with the impact of the label for the first time in a generation:

Food

August 2022 Food Inflation Statistics Chart

The Consumer Price Index for common household foods, including meat, eggs, fish, milk. fruits and vegetables and coffee increased. (US Bureau of Labor Statistics/Fox News)

Food has been one of the most visceral reminders of red-hot inflation for Americans, with prices rising 0.8% over the month, according to unadjusted figures. That is the first time in seven months that the increase has not exceeded 0.9%. On an annual basis, food prices have soared 11.4%.

Meanwhile, the cost of groceries rose 0.7%, bringing the 12-month increase to 13.5%, the highest since May 1979. Americans are paying more at the grocery store for a series of items that have risen considerably in price over a year. monthly period between July and August.

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That includes items like hot dogs (5.3%), potatoes (3.1%), eggs (2.9%), butter (2.7%), ham (2.5%), bread (2.2 %) and ice cream (2%).

“Rising food costs are a growing concern,” said Jeffrey Roach, vice president and chief economist at LPL Financial. “The food index rose 11.4% from a year earlier, the largest year-over-year increase since 1979. Inflationary pressures are hitting lower-income households especially hard, which spend a higher percentage of their income on food.”

Rent

sign for rent east village new york city

A “For Lease” sign outside an apartment building in the East Village neighborhood of New York, USA, on Tuesday, July 12, 2022. (Gabby Jones/Bloomberg via Getty Images/Getty Images)

In another worrying trend that will hit US households even harder, housing costs, which make up about a third of the CPI, accelerated again in August, up 0.7% from the previous month, compared with an increase of 0.5% in July.

Annually, housing costs have risen 6.2%, the fastest since February 1991.

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Rental costs increased 0.8% during the month and 6.7% year over year. Rising rents are a worrying development because higher housing costs more directly and sharply affect family budgets. Another data point that measures how much homeowners would pay in equivalent rent if they hadn’t bought their home, was up 0.7% in August from the previous month.

“Housing was another major factor contributing to inflation in August, with the housing index rising 0.7% monthly,” said Cailin Birch, global economist at The Economist Intelligence Unit. and mortgages continue to rise in the coming months, reflecting in part the increase in interest rates.

Energy

August 2022 Energy Inflation Statistics Chart

The year-over-year Consumer Price Index for energy increased. (US Bureau of Labor Statistics/Fox News)

There was some real relief for American households last month in the form of lower energy prices, which contributed to the drop in headline inflation. The cost of energy fell 6.2% in August compared to the previous month, although it is still 23.8% higher than just one year ago. Gasoline prices fell an impressive 12.2% in August, but are still up 25.6% from last year.

The average price of a gallon of regular gas was $3.70 nationwide on Wednesday, according to AAA. That marks a major drop from the record high of $5.01 set in mid-June, though it’s still a big rise from a year ago, when prices stood at $3.17.

The drop in energy prices was not across the board: electricity prices, for example, rose 1.1% in the one-month period from July to August and were up 15.8% from a year earlier.

cars

Inflation of pre-owned vehicles

A pedestrian walks past a used car sales lot in Miami, Florida, on January 12, 2022. (Photo by CHANDAN KHANNA/AFP via Getty Images/Getty Images)

Unfortunately for Americans who needed to buy a car in July, the price of new vehicles continued to rise.

the cost of new vehicles it’s up 10.1% from a year earlier, largely because semiconductor shortages continue to slow car manufacturing. On a monthly basis, the price of new vehicles rose 0.6%, according to unadjusted data from the Labor Department.

But prices for used cars and trucks, which have been a major component of rising inflation, actually fell 0.4% in August from the previous month. The cost of a used car or truck is still about 7.8% higher than it was a year ago.

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travel and transportation

August 2022 Travel Inflation Statistics Chart

The year-over-year Consumer Price Index for travel increased. (US Bureau of Labor Statistics/Fox News)

Airfares declined in August for the third month in a row, falling 8.8% in the one-month period since July. Still, airfare costs rose 33.4% over the past year, according to unadjusted data, in part because airlines are passing on the cost of more expensive fuel to consumers.

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