After months of significant declines in CPI inflation, today the CPI (Consumer Price Index) numbers for August showed a resurgence of inflation in the U.S.
In August, the CPI rose by 0.6 percent on a seasonally adjusted basis, marking a notable increase compared to the 0.2 percent rise in July. Over the past 12 months, the all-items index surged by 3.7 percent before seasonal adjustment. These figures indicate a noticeable uptick in consumer prices, which is a sign that inflation may not be under control yet and might warrant further tightening from the Federal Reserve (FED).
One of the primary drivers of the monthly increase in the CPI was the index for gasoline, which accounted for over half of the overall increase. The energy index, as a whole, rose by 5.6 percent in August, with all major energy components experiencing increases.
Another significant contributor to the August CPI increase was the shelter index, which continued its upward trajectory for the 40th consecutive month. The sustained growth in housing costs is a significant concern for many households, particularly those in high-demand urban areas, as it can strain budgets and impact overall affordability.
The food index, while not as pronounced as other components, still increased by 0.2 percent in August, following a similar increase in July. Food inflation affects every household, and even small increases can have a cumulative impact on consumers over time. The index for food at home and food away from home both saw modest increases of 0.2 percent and 0.3 percent, respectively, in August.
The core CPI, which excludes food and energy prices, rose by 0.3 percent in August, building on a 0.2 percent increase in July. Key contributors to this rise included rent, owners’ equivalent rent, motor vehicle insurance, medical care, and personal care. However, not all components of the core CPI saw increases, with lodging away from home, used cars and trucks, and recreation among those that decreased over the month.
Looking at the broader picture, the 12-month increase in the all-items index was 3.7 percent for the period ending in August, marking a notable acceleration from the 3.2 percent increase for the 12 months ending in July. This suggests that inflationary pressures may be gaining momentum, which is a matter of concern for both consumers and policymakers.
The all-items index, excluding food and energy, registered a 4.3 percent increase over the past 12 months, indicating that core inflation is also on the rise. While some factors contributing to this inflation may be transitory, others may be more persistent, making it essential for policymakers to carefully monitor the situation.
TFR has been sounding the alarm about the consequences of rising inflation on the budgets of Texas taxpayers for over a year. As the U.S. deals with the current recession, Texans everywhere are having to tighten their belts to afford to put food on the table.
Meanwhile, our Texas governments have not shown that same restraint. Our State legislature just increased spending at historic levels (42% in one year) and local governments are following suit raising rates to pay for their massive budgets across the State.
Ultimately, the people hurt the most are taxpayers as 2024 looks like a pretty bleak year for those already struggling to make it. Voters have a chance this next primary to vote out bad actors and replace them with fiscal conservatives, will Texans finally reject the status quo in favor of real change?
We will find out next March.
Texans for Fiscal Responsibility relies on the support of private donors across the Lone Star State in order to promote fiscal responsibility and pro-taxpayer government in Texas. Please consider supporting our efforts! Thank you!
Get The Fiscal Note, our free weekly roll-up on all the current events that could impact your wallet. Subscribe today!