Inflation eased slightly in August, but it was much less than expected.
The consumer price index rose by 8.3% compared to the same month last year. This is slightly below the 8.5% rate in July.
But monthly inflation still rose 0.1%, according to the Bureau of Labor Statistics, after flat in July. This added to fears that the Fed had not yet got prices under control and pushed ahead with its rate hike plan to try and slow the economy.
With a 10.6% decline in the gasoline index, there was a sharper rise in prices for food, housing and medical care.
Economist Paul Krugman, a columnist for The New York Times, tweeted: “So this core reading might be talking about the past, not the future. Given this reading, the Fed will have no choice as to whether to continue raising, but that shouldn’t greatly affect your views on how long and how far to go higher.”
Jason Furman, a Harvard professor who was chairman of President Barack Obama’s Council of Economic Advisers, called the latest report “ugly.”
He tweeted: “Where is inflation coming from? There are many stories to tell each month. But every month the stories change (airline prices go up and down, used cars go up and down, etc.). Constant: Extremely tight labor market and very high short-term inflation expectations (5.7% in NYFED).”
President Joe Biden hosts an event at the White House on Tuesday marking the passage of the Lower Inflation Act, the climate and health bill he signed into law last month.