Staff Writer

September 11, 2024

The latest Consumer Price Index (CPI) report for August reveals further easing in inflation, heightening expectations for a potential rate cut at next week’s highly anticipated Federal Reserve meeting. According to the U.S. Bureau of Labor Statistics, the CPI for all urban consumers increased by 0.2% on a seasonally adjusted basis, maintaining the same pace as in July. Over the past year, the all-items index rose by 2.5%, the lowest 12-month increase since February 2021.

The shelter index led the rise, climbing 0.5% in August and contributing substantially to the overall increase. Meanwhile, food prices rose slightly by 0.1%, with food away from home increasing by 0.3%, while the food-at-home index remained unchanged. Energy costs saw a significant decline, falling by 0.8%, reflecting easing gas prices, a key factor in the overall inflation drop.

Core inflation, which excludes volatile food and energy prices, increased by 0.3% month-over-month, slightly up from the 0.2% increase in July. However, the year-over-year core inflation rate remains at 3.2%. Notably, prices for used cars and trucks, household furnishings, and medical care declined, while costs for shelter, education, and airline fares rose.

This new data strengthens the likelihood that the Federal Reserve will reduce interest rates in its upcoming meeting, potentially marking the first cut in over four years. As inflationary pressures subside, the Fed is expected to shift focus from controlling prices to supporting economic growth, possibly implementing a quarter-point or even a more substantial half-point rate cut.