U.S. consumer goods prices rose less than expected in August, as inflation showed signs of easing up amid the Delta variant-driven COVID-19 surge and continued supply constraints, the U.S. Labor Department said Tuesday.
The consumer price index (CPI) increased 0.3 percent in August after rising 0.5 percent in July, according to the report released by the department's Bureau of Labor Statistics. The latest figure is down markedly from the 0.9 percent growth pace in June.
Over the past 12 months through August, the index increased 5.3 percent, slightly down from the 5.4 percent pace in June and July, the report showed.
Excluding the volatile food and energy components, the so-called core CPI edged up 0.1 percent last month after increasing 0.3 percent in July. In June, the core CPI soared by 0.9 percent.
Compared with a year earlier, the core CPI rose 4 percent in August, also a smaller increase than the 4.3 percent growth in July, the report showed.
"Inflation has begun to show signs of cooling in response to the Delta variant but the level of prices remains extremely elevated, especially for big-ticket items," Diane Swonk, chief economist at Grant Thornton, a major accounting firm, said in a blog.
She noted that new vehicle prices, in particular, jumped 1.2 percent in August and were up a whopping 7.6 percent from a year ago. "Shortages of dealer inventories are so acute that some smaller dealerships are worried about going out of business. They can't carry the costs of overhead without the vehicles to sell," she said.
According to the Bureau of Labor Statistics, the food index increased 0.4 percent in August after larger increases in recent months, with the index for meats, poultry, fish, and eggs rising 0.7 percent over the month. The beef index soared 1.7 percent.
The energy index, meanwhile, rose 2.0 percent in August, its third consecutive monthly increase. The gasoline index rose 2.8 percent in August, faster than the 2.4 percent growth in July.
"The basics of food and energy costs are also elevated, which is crimping consumer budgets," Swonk said.
Swonk also noted that energy prices are expected to move even higher given the damage to refining facilities following Hurricane Ida, which ups the commuting costs for low-wage workers who cannot work from home.