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Prices in August rose by 0.09% on a seasonally adjusted basis as measured by both the CPI-W and CPI-U All Items price indexes.
Last year, the same indexes rose by over 0.5% in August, and so, with that rise being replaced by last month’s small rise, the year-to-year price change – “inflation” – dropped heavily, from around 2% to 1.5%.
The detailed August inflation numbers for the three indexes measuring All Items are:
CPI-U 1.52%
CPI-W 1.46%
Chained CPI-U 1.42% (using not seasonally adjusted data)
The main driver of the drop is fuel costs. In the chart below we see a large monthly increase in August 2012 being replaced by a small drop this August. A similar, large monthly jump in September of last year will fall out of next month’s inflation rate. Pending our forecast of September 2013 price increases, we would expect a further sizable drop in annual inflation for next month.
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