August 2018 Consumer Price Index
Submitted by Atlas Indicators Investment Advisors on October 1st, 2018
Prices firmed in August 2018 for Americans according to the Bureau of Labor Statistics. Their Consumer Price Index (CPI) increased 0.2 percent in the period, matching July’s tally. However, the year-over-year figure declined to 2.7 percent after sitting at 2.9 percent in the prior two months. Excluding food and energy, the monthly core measure of CPI slowed to 0.1 percent from 0.2 percent (the slowest level since April of this year). Additionally, the core’s year-over-year figure also decelerated, dropping to 2.2 percent from the highest level since September 2008 of 2.4 percent a month earlier.
Energy and shelter costs led the monthly increase. The energy index alone jumped 1.9 percent in August; gasoline’s 3.0 percent surge was the primary factor in this uptick, but other energy components were higher as well. The shelter index rose 0.3 percent, matching July’s increase and gaining 3.4 percent in the past year.
Goods prices weakened in August. After being relatively flat in July, core-goods fell 0.3 percent and are negative versus a year ago, dropping 0.2 percent. The monthly change was led by a 1.6 percent drop in apparel prices, the largest of four consecutive declines. Recreation goods joined the trend, falling 0.5 percent in the period and 2.7 percent from a year earlier. New vehicle prices held steady after rising for three consecutive months but are up just 0.3 percent versus 12 months ago. Other goods with monthly declines include medical care products and home furnishings.
Like it’s Producer Price Index counterpart, the rate of change in the year-over-year tally put in a recent peak and has headed lower (see the chart above). Put another way, inflation’s trend is weakening. Generally speaking, this pushes against the idea of a strengthening economy. However, there are many other indicators signaling strength. This recent pricing weakness could be short-lived. Until additional evidence of slowing materializes, Atlas will consider inflation’s recent pattern to be an outlier and not something about which to be concerned.
