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September 16, 2016
NAFCU's Long: August CPI won't trigger Fed rate action
Overall consumer prices rose a seasonally adjusted 0.2 percent in August, and while the data show solid price gains, it isn't enough for the Fed to increase interest rates this month, said NAFCU Chief Economist and Director of Research Curt Long.
Personal consumption expenditures inflation – the Federal Reserve's preferred measure of inflation – grew just 0.8 percent, year over year, in July and remains well below the Fed's 2 percent target. "Overall, this report will likely support a December rate hike, but it is not enough to pressure the Fed to move in September," Long said in a NAFCU Macro Data Flash report.
The consumer price index data, published by the Bureau of Labor Statistics, noted that consumer prices were unchanged in July. For the 12-month period, overall CPI increased 1.1 percent, which is up from 0.9 percent in July.
Core prices (excluding food and energy costs) increased 0.3 percent in August from the previous month. Year-over-year core CPI growth edged up to 2.3 percent.
"Core CPI, driven by higher medical care costs and rental prices, rose at the fastest pace since February," Long said. "Medical care costs are 4.9 percent more expensive compared to a year ago as prices surged 1 percent in the month of August, which is the largest monthly increase since 1984."
Energy prices were unchanged in August; they declined 1.6 percent in July. From a year ago, energy prices were down 9.1 percent. Food prices were flat for the second consecutive month in August. The year-over-year price growth for food fell to zero, the lowest rate since February 2010.
Personal consumption expenditures inflation – the Federal Reserve's preferred measure of inflation – grew just 0.8 percent, year over year, in July and remains well below the Fed's 2 percent target. "Overall, this report will likely support a December rate hike, but it is not enough to pressure the Fed to move in September," Long said in a NAFCU Macro Data Flash report.
The consumer price index data, published by the Bureau of Labor Statistics, noted that consumer prices were unchanged in July. For the 12-month period, overall CPI increased 1.1 percent, which is up from 0.9 percent in July.
Core prices (excluding food and energy costs) increased 0.3 percent in August from the previous month. Year-over-year core CPI growth edged up to 2.3 percent.
"Core CPI, driven by higher medical care costs and rental prices, rose at the fastest pace since February," Long said. "Medical care costs are 4.9 percent more expensive compared to a year ago as prices surged 1 percent in the month of August, which is the largest monthly increase since 1984."
Energy prices were unchanged in August; they declined 1.6 percent in July. From a year ago, energy prices were down 9.1 percent. Food prices were flat for the second consecutive month in August. The year-over-year price growth for food fell to zero, the lowest rate since February 2010.
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