Inflation Up A Skosh In August, Let's Panic, Or Better Yet, Let's Not
Gas and food prices up a bit, and the rent is still too damn high.
US inflation rates ticked up a little bit in August, with the Bureau of Labor Statistics reporting that the Consumer Price Index was up .6 percent for the month, following a July increase of .2 percent. On an annual basis, that translates to a 3.7 percent increase “before seasonal adjustment,” which is how economics boffins remind us that they know the difference between winter and summer. On the whole, it’s not a particularly big deal, especially compared to the 9.2 percent inflation of Summer 2022. Get ready for Fox News to insist that two straight months of (very slight) inflation mean Donald Trump has a lock on the 2024 election, assuming he doesn’t have an actual lock on a cell door in front of him by then.
The largest driver of last month’s increase was gasoline prices, which accounted for more than half the increase. (Say hello to supply cuts by Russia and Saudi Arabia, kids.) Gas prices are always volatile, and let’s remind y’all again how nice it’ll be when EVs are everywhere and gas prices will no longer be the stupidest factor in electoral politics.
The other main contributors to the index were food prices, which are generally pretty variable, but up a little — .2 percent, the same as July’s increase. Higher costs for shelter, which the BLS notes has risen for 40 straight months, appears to be slowing ever so slightly, and one of these days we should probably do something about the cost of keeping a roof over people’s heads, ya think?
Even there, as the Washington Post reports (gift link), there might be some relief on the way “as roughly 1 million multifamily rental units come online later this year and next,” although any downward trends in rent may take months to show up in national inflation stats.
This is where I add that as part of my personal obsession with climate policy, I’m also becoming convinced that smarter housing policy is gonna be huge in getting a handle on climate change.
On the whole, though, according to the Post, the improvements on inflation from summer 2022 appear to be holding pretty well, leading to expectations that inflation can be brought under control without a recession. (Then, in the very next sentence, there’s the obligatory fretting that “remaining, persistent sources of inflation will be tricky to stamp out.”) Here, have an economist!
“There are unique supply problems going on, globally, and the Fed can’t do anything about it,” said Joe Brusuelas, chief economist at RSM. “The Fed will have to look right through the volatility.”
Inflation has come down for multiple reasons over the past year. Supply chains have cleared their backlogs, making it easier for consumers to get everything from computers to couches. The energy surge that followed Russia’s February 2022 invasion of Ukraine has abated. And the Federal Reserve has managed to get borrowing costs high enough to where they meaningfully slow the economy, especially in interest-rate-sensitive sectors like housing.
Hmm, you say that housing costs are rising due to high interest rates, but that the high housing costs are contributing to inflation, so the Fed may need to raise interest rates a bit to slow housing costs, but … beep beep beep beep Norman! Please coordinate!
As far as we can tell, the economists are saying that the new inflation numbers, along with continued but slowing job growth, suggest the economy is in pretty good shape overall, so prepare for the blip in gas prices to lead to many Twitter photos of ginormous pickups next to gas pumps with a large total on them. I got stuck in traffic behind a line of pickups flying three to eight Trump flags each the other day, and the aerodynamic drag from those suckers probably account for a good two or three drop in MPG, tell you what.
[Bureau of Labor Statistics / WaPo (gift link) / NBC News / Volts]
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I am sick and tired of Americans whining about gas prices. We did a trip to Quebec City a few weeks ago, and gas prices were about $1.65 a liter, or roughly $6.65 a U.S gallon, and that doesn't take into account the exchange rate. Americans are such blubbering wimps.
"...and gas prices will no longer be the stupidest factor in electoral politics."
If the president could control gas prices, it would be free.