August CPI: Turbulence on Inflation’s Descent

Source: Economics Group of Wells Fargo Bank, N.A. Summary The largest increase in consumer prices since June of last year was a reminder that inflation’s ride back to the Fed’s target was always going to be bumpy. The Consumer Price Index rose 0.6% in August, pushing the year-over-year rate of CPI up to 3.7%. Although a significant slice of August’s gain can be traced to a surge in gasoline prices, price growth for items excluding food and energy picked up a bit in August, with the core index rising 0.3%. Despite stronger monthly gains in the headline and core CPI in August, the trend in inflation has downshifted since the spring. The core CPI has slowed to 4.4% year-over-year, with the three month annualized rate of 2.4% showing momentum has slowed further in recent months. We expect the recent downshift will keep the Fed on hold for the foreseeable future, but with price growth still running in excess of 2%, rate cuts remain some ways out. READ FULL ARTICLE >>