US inflation rose 0.4 per cent in August as real hourly pay fell 0.1 per cent
US consumer prices increased 0.4 per cent in August and 3.4 per cent over the year, leaving the headline rate above the pre-release consensus of 3.3 per cent. A 3.9 per cent monthly rise in gasoline lifted energy, while core prices grew 0.3 per cent. Prices outpaced wages, cutting real hourly earnings 0.1 per cent, although longer working hours raised real weekly pay.
Economics & Markets··Night
Headline inflation exceeded the consensus
The US Bureau of Labor Statistics put August's seasonally adjusted increase in consumer prices at 0.4 per cent. The annual rate remained 3.4 per cent, above the 3.3 per cent market consensus reported before publication. Excluding food and energy, prices advanced 0.3 per cent during the month and 2.4 per cent from a year earlier. CBS News reported that the release strengthened the likelihood of a Federal Reserve rate increase at the following week's meeting.[1], [3]
Energy and core components
The energy index gained 2.1 per cent in one month, including a 3.9 per cent rise in gasoline. Gasoline was 27.4 per cent more expensive than a year earlier, while overall energy costs were up 16.3 per cent. Food added 0.1 per cent in August and shelter 0.3 per cent. Air fares stood 23.4 per cent above their year-earlier level. Medical care fell 0.2 per cent during the month and motor-vehicle insurance dropped 0.8 per cent, leaving the core movement uneven across categories.[1]
Longer hours supported weekly earnings
Consumer prices rose 0.4 per cent in August while average hourly pay before inflation increased 0.3 per cent, leaving real hourly earnings 0.1 per cent lower than in July after the price adjustment. The average workweek lengthened 0.3 per cent, while real weekly earnings finished the month 0.2 per cent higher. In the annual comparison, real hourly earnings changed by minus 0.3 per cent and real weekly earnings by plus 0.3 per cent. Hourly pay, time worked and consumer prices were separate components of the weekly purchasing-power measure.[1], [2]
