8.6 C
New York
Tuesday, September 21, 2021
Home Business Record-high U.S. inflation looking a little more transitory as rate cooled in...

Record-high U.S. inflation looking a little more transitory as rate cooled in August

The U.S. inflation rate rose at its slowest pace in seven months in August, far less than economists were expecting and a hopeful sign that inflation pressures may be cooling.

The U.S. consumer price index rose at 0.3 per cent in August, down from a 0.5 per cent increase in July and a 0.9 per cent surge in June, the Department of Labour reported Tuesday. It was the smallest increase since the 0.3 per cent rise clocked in January.

The August slowdown in prices was seen as offering some hope that Americans were finally starting to see some relief from a price surge earlier in the year.

Over the past 12 months, consumer prices have gone up by 5.3 per cent in the U.S. That’s a slight improvement after two months at 5.4 per cent, which had been the highest annual inflation rate since 2008.

Canadian data expected tomorrow

Canada is poised to release its inflation data for August on Wednesday. In July Canada’s rate hit a 10-year high of 3.7 per cent and economists expect the August number to tick even higher.

Core prices, which exclude volatile food and energy costs, rose a tiny 0.1 per cent in August and are up by four per cent over the past year.

Republicans have attacked the Biden administration for this year’s surge in prices, but administration officials have insisted that the price jump will be temporary and prices will begin to return to more normal levels as numerous supply chain problems are resolved.

‘Transitory’ inflation explained

Economists, too, have been trumpeting caution about high inflation, arguing that the large yearly numbers being seen are mostly a factor of COVID artificially dragging down baseline prices a year ago, and ongoing supply chain issues causing them to look artificially high now.

The economic term for short-term gyrations such as that is “transitory” — meaning they are just passing through, and may not last.

Economist Jennifer Lee with Bank of Montreal says the August numbers are high by any metric, but they do seem to suggest that some of the gains are running out of steam.

“Is this the end of the big monthly increases? I wouldn’t say that, as demand is still strong and could pick up further with wages rising,” she said. She noted that used car prices have been one of the biggest contributors to high inflation in recent months, but prices for them fell by 1.5 per cent in August — the first drop since February.

“The ‘is it transitory’ debate is far from over, but at least this more moderate gain in consumer prices will give the Fed some breathing room next week,” in terms of setting its benchmark interest rate, Lee said. “But not for long.”

Leslie Preston with TD Bank noted that “travel-related” prices, had been a big factor in driving inflation up in the spring, fell in August. Prices for shelter and medical supplies, meanwhile, heated up. “Once the post-pandemic price reversals are no longer a weight on inflation, these more persistent categories are likely to help keep inflation above target,” she said.

Source link

Today news
Today News 1 runs four of the western GTA’s most influential media websites, offering news, food, lifestyle and entertainment coverage for millions to the Golden Horseshoe and GTA regions. The independently-run, online news source was founded in 2019 and specializes in everything from breaking news to food and restaurant, arts and entertainment and lifestyle coverage.


Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

Netflix in talks to buy Roald Dahl catalogue

Netflix is in talks to acquire the works of Charlie and the Chocolate Factory author Roald Dahl, Bloomberg News reported on Tuesday, citing people familiar with the...

Global economy will suffer as long as rich countries don’t help vaccinate poor ones, OECD warns

A leading international economic watchdog urged developed countries to put more effort into providing low-income countries with coronavirus vaccines in order to ensure...

Winnipeg designer helps customers keep their heads up during pandemic

A Winnipeg headband designer is turning the pandemic blues into beautiful, hand-made headpieces that are spreading across social media and taking off worldwide....

Prairie ranchers take stock of summer drought as decisions about culling cattle loom

Pounded by drought and cattle feed shortages, the last few months have been gruelling for many Prairie ranchers.  Now, as fall approaches and...

Recent Comments