Inflation Eases In August, But Far Less Than Expected

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Inflation eased somewhat in August, but it was far less than expected.

The Consumer Price Index rose 8.3% compared to the same month a year ago. That was down a bit from the 8.5% rate in July.

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But month-over-month inflation still rose by 0.1%, according to the Bureau of Labor Statistics, after being flat in July. That has increased worries that the Federal Reserve has yet to get the increase in prices under control, and made continue its plan to raise rates to try to slow down the economy.

While there was a 10.6% decline in the gasoline index, there were sharper increases in the price of food, housing and medical care.

Economist Paul Krugman, op ed columnist for The New York Times, wrote on Twitter, “So this core reading may be telling us about the past, not the future. Given this reading, the Fed will have no choice about continuing to hike, but it shouldn’t greatly move your views about how long and how far the hikes will have to go.”

Jason Furman, Harvard professor who was President Barack Obama’s chairman of the Council of Economic Advisers, called the latest report “not pretty.”

He wrote on Twitter, “Where is the inflation coming from? Every month you can tell lots of stories. But every month the stories change (airfares up and down, used cars up and down, etc.) The constant: an extremely tight labor market & very high short-run inflation expectations (5.7% in the NYFED).”

President Joe Biden is holding an event at the White House on Tuesday to mark the passage of the Inflation Reduction Act, the climate and health legislation he signed last month.

In a statement, Biden said that it will “take more time and resolve” to curb inflation.

“Overall, prices have been essentially flat in our country these last two months: that is welcome news for American families, with more work still to do,” Biden said in a statement. “Gas prices are down an average of $1.30 a gallon since the beginning of the summer. This month, we saw some price increases slow from the month before at the grocery store.  And real wages went up again for a second month in a row, giving hard-working families a little breathing room.”

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