US headline CPI accelerated from 0.1% to 0.4% m/m in August, matching expectations, while the annual rate held at 3.4%. The monthly increase was heavily influenced by energy, which reversed from a -1.5% decline to a 2.1% rise, with gasoline up 3.9% and accounting for more than one-third of the overall CPI increase. Food inflation remained contained at 0.1% m/m, while the annual food rate slowed to 2.7%.
The more important surprise came from underlying inflation. Core CPI accelerated from 0.2% to 0.3% m/m, above the 0.2% consensus, even as the annual rate eased from 2.5% to 2.4%. Shelter picked up from 0.1% to 0.3% m/m, while services excluding energy also rose 0.3%. Communication jumped 2.3%, lodging away from home 2.4% and airline fares 2.7%, while medical care fell 0.2% and motor vehicle insurance declined 0.8%.
The report therefore preserves the longer-term disinflation trend in annual core inflation, but the monthly details are less reassuring. Core inflation has now accelerated from 0.0% in June to 0.2% in July and 0.3% in August, while the headline increase was boosted substantially by energy. The distinction is important: August does not show a renewed broad inflation surge, but the hotter monthly core reading means the report also falls short of providing clear evidence that underlying price pressure is continuing to cool at the recent pace.
Data Summary
| Indicator | Previous | Current | Expected |
|---|---|---|---|
| CPI m/m | 0.1% | 0.4% | 0.4% |
| CPI y/y | 3.4% | 3.4% | 3.4% |
| Core CPI m/m | 0.2% | 0.3% | 0.2% |
| Core CPI y/y | 2.5% | 2.4% | 2.4% |
Headline CPI matched expectations, while the monthly core reading was one tenth stronger than forecast.
Key Components
| Component | Previous | Current |
|---|---|---|
| Energy m/m | -1.5% | 2.1% |
| Gasoline m/m | -2.9% | 3.9% |
| Food m/m | 0.1% | 0.1% |
| Shelter m/m | 0.1% | 0.3% |
| Services ex-energy m/m | 0.2% | 0.3% |
| Core goods m/m | 0.2% | 0.1% |
| Energy y/y | 14.7% | 16.3% |
| Shelter y/y | 3.2% | 3.0% |
| Services ex-energy y/y | 3.0% | 3.0% |
Gasoline alone accounted for more than one-third of August’s headline CPI increase, while shelter and services inflation firmed on the month.
Key Takeaways
- Headline CPI accelerated from 0.1% to 0.4% m/m, exactly matching consensus, while the annual rate stayed at 3.4%.
- Energy was a major driver. The energy index swung from -1.5% to +2.1% m/m, with gasoline up 3.9% and contributing more than one-third of the headline increase.
- The main upside surprise was core CPI at 0.3% m/m, above the 0.2% forecast and up from 0.2% in July.
- Annual core inflation nevertheless continued to moderate, from 2.5% to 2.4%, extending the decline from 2.9% in May.
- Shelter inflation reaccelerated from 0.1% to 0.3% m/m, while services excluding energy also rose from 0.2% to 0.3%.
- Core goods remained relatively contained at 0.1% m/m and 0.7% y/y, while medical care and motor vehicle insurance provided offsets to stronger services categories.
- Overall, August preserves the longer-term core disinflation trend, but the 0.0% → 0.2% → 0.3% monthly core sequence since June shows that near-term underlying momentum has firmed rather than continued cooling.
