ARLINGTON, Va.—August's core consumer price index (CPI) saw its largest year-over-year growth (2.4%) since 2008, according to data from the Bureau of Labor Statistics.
NAFCU Chief Economist and Vice President of Research Curt Long noted that core CPI removes food and energy components, which tend to be more volatile, and attributed its growth to an increase in healthcare costs.
"On the face of it, a 2.4% core CPI number suggests that the Fed’s measure may be closing in on its 2-percent goal," Long said in a NAFCU Macro Data Flash report. "However, the rise in core CPI the past three months has been largely due to increasing healthcare costs. The PCE measure of healthcare prices is broader and more stable, so may not show the same increases as CPI.
"But regardless, inflation is firming. That combined with a strong labor market will give the Fed pause as it considers further monetary easing,” continued Long. “NAFCU still expects a rate cut next week, but with a signal from [Federal Reserve] Chairman [Jerome] Powell that the economy would need to materially weaken before the committee could get behind another cut in the fourth quarter."
Overall consumer prices increased 0.1% in August, boosting overall CPI growth to 1.8% for the 12-month period.
Energy prices fell 1.9% in August and were down 4.4% from a year ago. Food price growth was flat in August, but up 1.7% on a year-over-year basis.