High gas prices push up inflation, but prices overall are slowly moving in the right direction
Inflation jumped last month largely because of a spike in gas prices, while other costs rose more slowly, suggesting price pressures are easing at a gradual pace
WASHINGTON — Inflation jumped last month largely because of a spike in gas prices but other costs rose more slowly, suggesting price pressures are easing at a gradual pace.
In a set of conflicting data released Wednesday, the Labor Department said the consumer price index rose 3.7% in August from a year ago, up from a 3.2% annual pace in July. Yet excluding the volatile food and energy categories, so-called core prices rose 4.3%, a step back from 4.7% in July and the smallest increase in nearly two years. That is still far from the Federal Reserve’s 2% target.
The big rise in gas prices accounted for more than half of the monthly inflation increase, the government said.
Despite the seemingly divergent figures, the decline in the core measure points to inflation coming under control, but at a much more gradual pace than earlier this year. The Federal Reserve closely tracks core prices because they are seen as a better indicator of future inflation trends.
The Fed is widely expected to skip an interest rate hike at its meeting next week. Wednesday's figures keep the prospect of another rate increase later this year on the table, however, perhaps at its November or December meetings, economists said, because core prices ticked up a bit faster in August than in July.
Wednesday's report suggested that after inflation faded quickly over the spring and the summer, future declines will be much more gradual. Inflation dropped to 3% in June, down from a 9.1% peak in June 2022. Some of the forces that pulled down prices earlier this year — such as lower gas prices and
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