Despite some economists’ predictions that inflation in the U.S. economy had been tamed, the Bureau of Labor Statistics (BLS) announced Wednesday that inflation continued to rise in August.
At the same time, BLS reported that real average hourly earnings for American workers fell last month.
The Consumer Price Index for All Urban Consumers (CPI-U) continued its upward trajectory in August, reporting an increase of 0.6 percent on a seasonally adjusted basis, according to the latest report from the U.S. Bureau of Labor Statistics.
This surge comes on the heels of a 0.2 percent rise in July that gave some cause to believe the Federal Reserve’s interest rate hikes had tamped down inflation.
The report underscores ongoing concerns about inflationary pressures within the U.S. economy.
Inflation in the U.S. has run rampant since the federal government’s response to the COVID-19 outbreak, which involved the creation of trillions of dollars in debt.
Over the past 12 months, the CPI, before seasonal adjustment, registered a substantial increase of 3.7 percent.
The surge in gasoline prices emerged as the primary driver behind the monthly increase in the all items index for August, with gasoline costs accounting for more than half of the overall rise. Concurrently, the shelter index continued its ascent for the 40th consecutive month, further contributing to August’s inflationary pressures.
The energy index, which saw all major components registering increases, rose by 5.6 percent in August. Additionally, the food index posted a modest 0.2 percent increase for the month, mirroring its performance in July. This uptick was driven by a 0.2 percent rise in the index for food at home and a 0.3 percent increase in the index for food away from home.
Excluding food and energy prices, the index for all items increased by 0.3 percent in August, following a 0.2 percent uptick in July. This increase was driven by rising costs in various sectors, including rent, owners’ equivalent rent, motor vehicle insurance, medical care, and personal care. However, some indices saw declines during the month, including those for lodging away from home, used cars and trucks, and recreation.
On a year-over-year basis, the all items index recorded a larger increase of 3.7 percent for the 12 months ending in August, surpassing the 3.2 percent increase reported for the 12 months ending in July. Similarly, the index for all items excluding food and energy registered a substantial year-over-year increase of 4.3 percent. Over the same period, the energy index exhibited a decline of 3.6 percent, while the food index marked a notable increase of 4.3 percent.
These inflation figures indicate that the U.S. economy is grappling with persistent upward price pressures across a broad spectrum of goods and services, making it a matter of continued concern for policymakers and consumers alike.
As the Federal Reserve seeks to navigate the delicate balance between economic growth and price stability, the latest CPI data will likely influence their decisions regarding interest rates and monetary policy in the coming months.
U.S. Workers’ Real Earnings Fall as Dollar Devalues
Real average hourly earnings for all U.S. employees took a hit in August, declining by 0.5 percent on a seasonally adjusted basis, according to a report released Wednesday by the U.S. Bureau of Labor Statistics.
This dip reflects a 0.2 percent increase in average hourly earnings coupled with a sharp 0.6 percent surge in the Consumer Price Index for All Urban Consumers (CPI-U).
As a consequence of this decrease, real average weekly earnings also experienced a slight setback, declining by 0.1 percent over the same period. This outcome is attributed to the changes in real average hourly earnings, combined with a 0.3-percent uptick in the average workweek.
Zooming out to a year-over-year perspective, real average hourly earnings managed to inch up by 0.5 percent, seasonally adjusted, from August 2022 to August 2023. However, the offsetting decrease of 0.3 percent in the average workweek tempered the gains, resulting in a modest 0.3-percent increase in real average weekly earnings over the same period.
These figures underscore the ongoing challenges faced by American workers as they grapple with the erosion of real wages amid a backdrop of rising consumer prices.
The declining purchasing power of these earnings highlights the pressing issue of inflation, which continues to be a focal point for policymakers, businesses, and households alike.