August Consumer Price Shows Inflation May Be Abating

CPI Number Below Economists’ Target

The prices on a variety of consumer products increased less than expected in August, providing the first sign that inflation could be cooling down. The Consumer Price Index, which tracks a basket of products commonly used by consumers, rose 5.3% year-over-year in August and is up 0.3% from July. Economists had forecast the CPI to increase 5.4% in August.

The slower-than-expected increase in consumer prices is the first sign inflation may be slowing. The Federal Reserve has been saying the uptick in inflation would be temporary. The bank’s leadership has pointed to pent-up demand, stimulus checks, and supply-chain issues as reasons for the spike. The Fed is closely monitoring inflation data as it works to determine when to ease its emergency bond-buying program.

Energy Prices Drove the Increase

Energy prices drove much of the increase in inflation in August, with gasoline prices up 2.8%. Food prices increased 0.4%. Energy prices are 25% higher than a year ago while gasoline is up 42%. Excluding food and energy prices, which tend to be more volatile, the Consumer Price Index increased 0.1% month-over-month, and 4% from a year ago. It marks the slowest pace of inflation price increases since February.

Used car and truck prices fell for the first time in several months, declining 1.5% in August. Used car and truck prices are still 31.9% higher on a year-over-year basis. New car prices increased 1.2%.

Treasury Yields Move Lower

August’s CPI results sent US Treasury yields lower Tuesday, with the yield on the 10-year Treasury note falling 3.7 basis points to 1.287% at midday. Meanwhile the 30-year Treasury bond yield slipped 4.2 basis points to 1.862%. The 10-year Treasury note is the benchmark used to set borrowing costs for mortgages and corporate debt. Some investors have been concerned that rising inflation would prompt the Fed to raise interest rates at a faster pace, which would hurt the value of bonds already in the market. The CPI result relieves some of those fears.

Investors concerned about inflation were hopeful after yesterday’s CPI numbers were released, though stocks fell after an initial bump. It will be interesting to see if inflation continues to cool off.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

TLS 1.2 Encrypted
Equal Housing Lender