U.S. consumer prices in August picked up 2.5 percent from a year ago, a slowdown from the 2.9-percent annual rise in July and representing the lowest inflation rate since February 2021, the Labor Department reported Wednesday.
According to data released by the Bureau of Labor Statistics, the Consumer Price Index (CPI) rose 0.2 percent on a seasonally adjusted basis in August, and 2.5 percent over the last 12 months.
While August's CPI decreased considerably from a peak of 9.1 percent in June 2022, it is still higher than the Federal Reserve's 2-percent inflation target.
The latest inflation report showed that the so-called core CPI, which excludes food and energy, gained 0.3 percent in August after increasing 0.2 percent in July. The core CPI has jumped 3.2 percent over the last 12 months, highlighting a higher inflation rate compared to the overall CPI gauge.
The index for shelter rose 0.5 percent in August and was the main factor in the all-items increase, said the report.
"Although inflation has eased, it does not mean that the prices of things that people buy have actually fallen," Lisa Sturtevant, chief economist at Bright MLS, was quoted by CNBC as saying. "It just means that prices are not increasing as fast. In fact, U.S. consumers now are paying more than 20 percent more for goods and services than they were before the pandemic," Sturtevant said.
Fed Chairman Jerome Powell suggested in August that "the time has come" for a shift in monetary policy, with expectations of a potential rate cut at the upcoming policy meeting on September 17-18.
The Fed hiked rates 11 times between March 2022 and July 2023 by a total of 525 basis points to tame high inflation, leaving the federal funds rate at its highest target range of 5.25-5.5 percent in 23 years.
U.S. inflation drops to lowest level since Feb 2021
U.S. inflation drops to lowest level since Feb 2021
