Inflation Eases but Remains Near 13-Year High

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While the cost of goods and services eased slightly in August, inflation remains near its hottest level in about 13 years. The Consumer Price Index for All Urban Consumers, a measure of price changes commonly referred to as the inflation rate, increased 5.3% during the year-ending August 2021, according to the Bureau of Labor Statistics. That increase was softer than expected and slightly behind the 13-year highs of 5.4% seen in the 12-months ending in June and July. Economists had expected an equal price increase of 5.4% in August. Aside from a brief oil-driven spike in 2008 when prices rose 5.6% year-over-year, consumer prices have been rising near three-decade highs. Accounting for much of the recent increase in inflation, energy prices were up 25% in the year-ending August, with gasoline prices alone surging 42.7% year-over-year. Food prices were up 3.7% on an annual basis. The recent increase was also partly attributed to surging prices of pre-owned vehicles, as the price of used cars and trucks soared 31.9% in the year-ending August. However, that hike was down from previous months. The recent inflation rate also reflects a surge in demand and shortages in materials and labor. Officials at the Federal Reserve System believe the current price hikes are temporary due to pandemic-related factors and are making up for year-ago comparisons when economic activity was constrained due to the initial wave of the COVID-19 pandemic.