Inflation probably slowed for the second month in a row in August. Still, consumer prices are expected to remain painfully high, which will keep the pressure on the Federal Reserve to stay strong during its policy-making meeting next week.
The Labor Department will publish the long-awaited report on the consumer price index on Tuesday morning, which offers a fresh look at the high inflation in August.
Economists expect the meter, which measures a basket of goods including gasoline, health care, groceries and rent, to show that prices rose 8.0% in August from the previous year – a drop from the previous year. 8.5% value in July and a marked decline from the The 40-year high of 9.1% reached in June.
On a monthly basis, inflation is expected to fall by 0.1%. Still, the report is expected to show underlying dynamics in inflation: core prices, excluding the more volatile measures of food and energy, are expected to rise 6.0% annually, marking a four-month streak of slowing growth is broken and the fastest pace is reached since April.
On a monthly basis, prices are likely to have increased by 0.3%, driven by prices in areas such as housing and rent. The price spikes are fueled by various issues related to the COVID-19 pandemic and the rousing economic recovery from the worst downturn in nearly a century.
In the wake of lockdown orders that closed much of the country, the economy made a stunning comeback, fueled by unprecedented government spending, Fed emergency measures and the widespread distribution of vaccines.
As Americans – awash with stimulus money – ventured to shop, eat and travel, companies struggled to meet demand, reported difficulties hiring new employees and buying enough supplies to meet the need. .
To attract new talent, many companies have increased wages, but to offset those increases, employers have reported raising the prices of their products. The case was complicated by bottlenecks in ports and freight yards and a lack of shipping containers, disrupting the global supply chain.
Since early spring, however, the Russian war in Ukraine has further exacerbated the inflationary crisis by raising food and energy prices.
Oil and petrol prices fell sharply over the summer, although economists have warned that the situation remains uncertain due to the ongoing conflict in Europe.