AIER’s daily price index fell 1.3 percent in August

AIER’s daily rate fell 1.3 percent in August after declining 0.6 percent in July. These were the first consecutive declines since October and November 2020. Since a year ago, the daily price index rose by 11.1 percent. However, auto fuel prices were more responsible for the overall decline in August, to offset the big increases in other major categories.

Auto fuel prices, which are often an important driver of monthly changes in the daily price index due to the large weight in the index and the volatility of the underlying commodity, fell 12.1 percent for the month, reducing the overall gain by 188 basis points (on a seasonally unadjusted basis). Seven other components showed price drops in August, including a 1.4 percent drop in admission prices, a 0.8 percent decline in inland transportation, and a 0.3 percent drop in cable and satellite services. However, their contributions to the overall index were very small.

The price increase was led by local services (2.3% increase), recreational reading materials (2.1%), tuition fees (1.8%), and pet and pet products (1.6%). The three largest positive contributors in August after motor fuels were household and utilities fuel (up 1.3% and contributing 19 basis points), food at home (up 0.7% and contributing 17 basis points), and food away from home (0.9% increase). month and add 13 basis points). A total of 15 categories saw price increases versus eight that showed decreases.

The daily price index, including apparel, a broader measure that includes apparel and footwear, fell 1.1 percent in August. Over the past year, the daily price index, including clothing, rose 10.7 percent, the lowest since February.

Clothing prices rose 1.7 percent on a seasonally unadjusted basis in August. Clothing prices tend to fluctuate on a monthly basis. A year ago, clothing prices rose 5.1%.

The Consumer Price Index, which includes daily purchases as well as big-ticket goods and contractual fixed-items purchased infrequently, was unchanged on a seasonally unadjusted basis in August. Within the CPI, energy decreased by 6.2 percent on a seasonally unadjusted basis while food increased by 0.8 percent. Over the past year, the CPI rose by 8.3%.

The consumer price index, excluding food and energy, rose 0.5 percent for the month (not seasonally adjusted) while the 12-month change came in at 6.3 percent. The 12-month change in core CPI was just 1.3 percent in February 2021 and 2.3 percent in January 2020, before the pandemic.

Seasonally adjusted, the CPI rose 0.1 percent in August while the core index rose 0.6 percent in the month. Basically, commodity prices rose 0.5 percent in August and 7.1 percent from a year ago. Significant increases during the month were seen in home furnishings (1.1 percent), auto parts and equipment (1.1 percent), and new vehicles (0.8 percent), while video and audio products fell 1.6 percent, and used cars and trucks registered 0.1 percent. Drops.

Prices for essential services rose 0.6 percent for the month and 6.1 percent from a year ago. Among the basic services, gainers include health insurance (up 2.4 percent and 24.3 percent from last year), auto repair (1.7 percent and 9.1 percent from last year), and auto insurance (up 1.3 percent for the month and 8.7 percent for the month and 8.7 percent). percent from a year ago), Medicare (up 0.8 percent for the month and 5.6 percent from a year ago), and shelter rent (which accounts for 31.9 percent of the CPI, up 0.7 percent for the month and 6.3 percent from a year ago).

Public transportation was one of the few significant categories to report a decline in August (-3.2% for August but still 1.0% higher than last year). In public transportation, airfares fell 4.6 percent during the month, but rose 33.4 percent from last year, and car and truck rents fell 0.5 percent in the month and 6.2 percent from last year. Price pressures for many goods and services in the economy remain high due to shortages of supplies and materials, logistical and supply chain issues, and labor shortages and turnover. Continued increases in high prices are likely to distort economic activity by influencing consumer and business decisions. Moreover, price pressures have led to a severe tightening cycle from the Fed, raising the risk of a policy error. The fallout surrounding Russia’s invasion of Ukraine continues to disrupt global supply chains. All of these factors maintain a high level of uncertainty about the economic outlook. Caution is required.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 after more than 25 years researching financial and economic markets on Wall Street. Previously, Bob was Head of Global Equity Strategy for Brown Brothers Harriman, where he developed an equity investment strategy that combines top-down macro analysis with upward fundamentals.

Prior to BBH, Bob was Chief Equity Analyst at State Street Global Markets, Chief Economist at Prudential Equity Group and Chief Economist and Financial Markets Analyst at Citicorp Investment Services. Bob holds an MA in Economics from Fordham University and a BA in Business Administration from Lehigh University.

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