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Forget August CPI: U.S. inflation to cool as voters go to the polls

U.S. prices rose faster than expected in August, but other data suggest inflation will start to cool in the fall, just as U.S. voters head to the polls in the midterm elections.

Prices rose 0.1% last month, according to the U.S. Bureau of Labor Statistics (BLS), while economists had expected inflation to fall 0.1%. Annual inflation fell from 8.5% to 8.3% as monthly inflation was slower than most previous months.

Economists’ forecasts are based on lower prices for gasoline, used cars and retail goods, which are reflected in other reports. The most likely explanation for this disconnect is that these price declines will show up in the core price index (CPI) in the coming months.

According to the new CPI report, gasoline prices fell 10.6%, and airfares fell 4.6% due to lower jet fuel. But other metrics were more surprising:

  • Used car prices fell just 0.1% after record drop by Mannhi M index. This was offset by a 0.8% increase in new car prices. The slowdown in the auto market is likely to be reflected in future reports.
  • August CPI report Home prices accelerated in 2019, although other measures of U.S. rental prices slowed. Those prices will also stop rising so quickly as the housing market contraction triggered by the Fed’s rate hikes drives sellers to renters.
    • Despite the drop in shipping, and several major Retailers say they’re offering discounts to get out of the woods, but clothing prices are still up and overstock.

    “What you hear on earnings calls and transcripts takes some time to enter data because labor Skanda Amarnath, executive director of the advocacy and research group Employ America, said. “There are few reports, which should indicate that U.S. inflation is indeed starting to cool. The bureau’s next CPI report is due on Oct. 13, before Americans are in the midterm elections.” Three weeks before the vote for many senators and delegates. While Republicans will rattle about any rate of change above the 2% standard, the story of falling inflation — and so quickly — can only help Democrats.



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