Inflation Increases 8.3% Year Over Year in August, Trends Slightly Down From July
The Bureau of Labor Statistics (BLS) announced that the U.S. consumer price index (CPI) increased 8.3% year over year in August 2022, remaining uncomfortably rapid for the month. The CPI didn’t ease as much as expected by economists, putting continued inflation-related financial pressure on consumers.
The “core” CPI, which strips out the unpredictable food and energy components, accelerated more than expected. Prices rose 6.3% over last year and 0.6% over the prior month in August. The expectations were for a 6.1% annual increase and a 0.3% monthly increase in core CPI.
“The surprisingly strong core CPI in August—when most thought lower gasoline prices would push down other prices as well—indicates that wages have now become the top driver of inflation. With Fed officials already highly concerned about a potential wage-price spiral, the central bank will likely keep hiking in the first half of 2023.”
- Anna Wong and Andrew Husby, Bloomberg economists
According to the BLS, inflationary pressures remained strong across other components of the monthly report. Significant shelter, food and medical care costs offset declining gas and energy prices.
What’s Next?
The Federal Reserve (Fed) has been raising interest rates to slow the economy and attempt to tame rapid inflation. However, August’s CPI is a sign that price increases aren’t under control yet and that further aggressive action may be needed. The Fed will meet again later this month.
Only time will tell if inflation will cool down, but economists warn that interest rates will likely continue to rise. Many American workers report that they—and their friends and family—are struggling financially. Inflation erodes spending power and can make it harder to find a job. It could also mean the cost of debt will increase for credit cards, automobile financing and personal loans.
Discussing financial and investment goals with a financial advisor can be helpful. If you have additional questions or need resources for financial assistance, speak to your employer.
The content of this News Brief is of general interest and is not intended to apply to specific circumstances. It should not be regarded as legal advice and not be relied upon as such. In relation to any particular problem which they may have, readers are advised to seek specific advice. © 2022 Zywave, Inc. All rights reserved.