US consumer prices rose 0.4% in August from the previous month, while it is up by 1.3% annually from the same period a year ago, Department of Labor’s Bureau of Labor Statistics announced Friday.
The rise in consumer prices came lower than the 0.6% increase recorded in July, but it beat market expectations in both monthly and annual terms. While the market expectation for a monthly increase in August was 0.3%, the annual estimate was 1.2%.
The largest factor in the monthly increase was “a sharp rise in the used cars and trucks,” the department said in a statement, adding “indexes for gasoline, shelter, recreation, and household furnishings and operations also contributed.”
While the energy index rose 0.9% in August as the gasoline index increased by 2%, the food index rose 0.1% last month after falling in July, according to the statement.
Despite the increase in consumer prices, inflation in US still remains under check, as the world’s largest economy continues to struggle with contraction due to the novel coronavirus.
The US Federal Reserve Chair Jerome Powell announced on Aug. 27 a major policy shift that now focuses on allowing inflation to run “moderately higher for some time” rather than its usual target of 2% in recent years.
He signaled that the central bank could keep interest rates lower for longer, while focusing also to achieve “maximum employment” to restart the US economy.
Although the Fed traditionally believed that low unemployment can lead to higher levels of inflation, Powell said “inflation that is persistently too low can pose serious risks to the economy,” during his speech at the Fed’s annual Jackson Hole symposium.