September 21, 2017 – The Consumer Price Index (CPI) tells us of any inflationary pressures in the economy. The CPI measures the average price levels of a basket of goods and services purchased by consumers. The index starts with a base time period (1982-1984, currently) and shows the overall increase since that time. As with many economic indicators, it can be volatile from month to month with food and energy prices often leading the volatility.
The Consumer Price Index increased 0.4% in August, exceeding expectations of a 0.3% increase. Core CPI, which excludes food and energy rose in line with expectations at 0.2%. Year-over-year CPI is up 1.9% and core CPI is up 1.7% over the last year. Energy spiked 2.8% with gasoline contributing the most with an increase of 6.3%.
A large part of the increase in CPI is due to the hurricanes happening in the South. Limited supply of food and gasoline increased the price dramatically as people prepared to take shelter or evacuate. Transportation costs this month, including motor fuel, spiked 1.4% as residents of these states fled. Taking out food and energy shows a more accurate picture right in line with expectations.