The pace of overall inflation slowed in August, with declines in airfares and used car prices helping to offset higher bills on items like groceries, gasoline, and housing.
- The pace of month-to-month inflation slowed again in August.
- Prices for used cars and airfares dropped, while the cost of food, housing, and gasoline increased.
- Wariness to travel amid a resurgence in COVID-19 depressed travel-related costs, economists said.
The Consumer Price Index rose 0.3% in August—decelerating from 0.5% in July and 0.9% in June and marking the smallest month-to-month increase since January, according to data released Tuesday by the Bureau of Labor Statistics. The CPI was 5.3% higher than in August 2020, marking the second-highest year-over-year inflation rate since 2008 (the highest was 5.4% in June and July.)
The monthly increase was powered by gas prices (which rose 2.8%), furniture (up 2.3%), food prices (0.4%), and rent and homeownership (0.3%). The price of beef—which has been of particular concern to President Joe Biden—jumped 1.7% in August and is now up 12% in the last year. Excluding the more volatile food and energy components, prices rose just 0.1% from July, the smallest increase in six months.
Items that had driven much of the increases in CPI in recent months fell in August. The price of used cars declined for the first time in six months, dropping 1.5%. Airline fares fell 9.1%, the price of car rentals dropped by 8.5%, and hotel rooms decreased by 3.3%—all signs of people’s wariness to travel amid a resurgence of coronavirus cases in the U.S. in July and August.
“Reignited COVID concerns took a clear toll on travel-related prices,” economists at Wells Fargo Securities wrote in an online commentary.
Inflation spiked earlier this year, a symptom of the growing pains experienced as the economy opened up again following a pandemic crush.
Even this far into the recovery, higher prices aren’t likely to go away as businesses pass along the costs of wage increases and supply shortages to consumers, economists said. Forty-nine percent of small businesses in August said they had raised prices in recent months (up from 46% in July) and 44% more expect to hike prices shortly (the same share as in June and July), a survey from the National Federation of Independent Business showed.
The CPI was 5.3% higher than in August 2020, marking the second-highest year-over-year inflation rate since 2008 (the highest was 5.4% in June and July.)
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