The prices of goods and services purchased by U.S. consumers rose at a faster rate in August compared with July, data from the Bureau of Economic Analysis showed Friday.
The personal consumption expenditure price index rose by three-tenths of a percentage point in August after declining one-tenth of a point in July. Core PCE prices, which exclude food and energy, rose 0.6 percent after a flat July. That matches the two-decade high hit June.
Both headline and core prices exceeded economist expectations. According to Econoday, the median forecast was for a two-tenths of a point gain in the headline price index and 0.5 percent.
Compared to a year ago, PCE prices are up 6.2 percent. That is slightly below the year-over-year figure of 6.4 percent in July. Core PCE prices up 4.9 percent year-over-year, up from 4.7 percent in July.
From the preceding month, prices for goods decreased 0.3 percent and prices for services increased 0.6 percent. Food prices increased 0.8 percent and energy prices fell 5.5 percent. Compared with a year ago, prices for goods rose 8.6 percent and prices for services are up 5.0 percent. Food prices have jumped 12.4 percent and energy prices soared 24.7 percent.
Another measure, called market-based PCE is based on household expenditures for which there are observable price measures. It excludes most imputed transactions (for example, financial services furnished without payment) and the spending by nonprofit institutions serving households. This rose 0.2 percent in August, up from flat in July. Excluding food and energy, market-based PCE was up 0.5 percent, up from 0.2 percent in August. Compared with a year ago, market-based PCE is up 6.7 percent, down from 6.8 percent in July, and core market-based PCE is up 5.2 percent, up from 4.9 percent.
The personal consumption expenditure price index is closely watched by the Federal Reserve and used for the central bank’s targets and projections of inflation. It covers a broader swathe of the economy than the better-known Consumer Price Index.
The August figures show that the dip in inflation seen in July was short-lived. President Biden recently falsely claimed that the “inflation rate month-to-month was up just an inch, hardly at all.” In fact, core PCE inflation is running just about even with the 21 years long high hit in June of this year. The last time core PCE prices rose this fast was a single month in 2001, just after the 9/11 attacks. Prior to that, you have to go back to 1983 to find prices rising this fast.
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