Inflation Eases but Remains Near 13-Year High

While the cost of goods and services eased slightly in August, inflation remains near its hottest level in about 13 years. The Consumer Price Index for All Urban Consumers, a measure of price changes commonly referred to as the inflation rate, increased 5.3% during the year-ending August 2021, according to the Bureau of Labor Statistics. That increase was softer than expected and slightly behind the 13-year highs of 5.4% seen in the 12-months ending in June and July. Economists had expected an equal price increase of 5.4% in August. Aside from a brief oil-driven spike in 2008 when prices rose 5.6% year-over-year, consumer prices have been rising near three-decade highs. Accounting for much of the recent increase in inflation, energy prices were up 25% in the year-ending August, with gasoline prices alone surging 42.7% year-over-year. Food prices were up 3.7% on an annual basis. The recent increase was also partly attributed to surging prices of pre-owned vehicles, as the price of used cars and trucks soared 31.9% in the year-ending August. However, that hike was down from previous months. The recent inflation rate also reflects a surge in demand and shortages in materials and labor. Officials at the Federal Reserve System believe the current price hikes are temporary due to pandemic-related factors and are making up for year-ago comparisons when economic activity was constrained due to the initial wave of the COVID-19 pandemic.