In the last month, inflation continued to increase in the US, leading to higher prices for consumers purchasing some types of products.
According to the US Labor Department, the Consumer Price Index (CPI) rose by 0.1%. Although this seems like a small increase, economists had predicted that the index would go down and inflation had been flat in the previous month.
For consumers, this means that the average prices rose on a 12-month basis by 8.3% in August, compared with 8.1% in the previous month.
Gasoline prices are falling
Only a few costs were lower for consumers in August, and one of them was the price of gasoline, which has been falling in price for several weeks.
The cost of gas was down 10.6% from July to August. Air fares also dropped dramatically, declining 4.6% following July’s 7.8% decline.
Additionally, the price of used vehicles fell by 0.1% in August and 0.4% in July. The cost of new and used cars reached a record high in June, which also meant a higher number of thefts than usual. A report by the National Insurance Crime Bureau (NICB) found that, following a record increase in used car prices last year, the number of vehicle thefts increased by 8%.
What is driving inflation?
Higher consumer spending is being driven mainly by food prices, which were significantly higher last month. The cost of food increased by 0.7% in August and by 13.5% in the last 12 months. Food purchased in restaurants rose by 0.9% in just one month.
Other costs, including medical care and education, also increased last month.
Here’s how those one-month cost increases break down, according to the report:
- Housing – 0.7%
- Medical care – up 0.8%
- Household furnishings – up 1%
- Car insurance – up 1.3%
- Education – 0.5%
- New vehicles – 0.8%
There are fears that higher prices could lead to increased consumer debt in the coming months. A recent report released by the US Federal Reserve shows that consumer debt increased to $4.5 trillion in February, with credit card debt seeing the largest rise.