Consumer prices continued to climb in August, as inflation concerns persist

Exactly one month ago, Donald Trump chatted briefly with reporters on a tarmac and boasted about inflation. “Prices are dropping fast,” the president said.

The rhetoric was wrong but familiar. In fact, a month earlier, the Republican similarly claimed, “Inflation is way down. Everything is great. The prices are coming down.”

Reality continues to tell a very different story. CNBC reported:

Prices for a wide swath of goods and services continued to climb in August, according to a report Friday that raises the specter of a Federal Reserve interest rate hike next week.

The consumer price index rose a seasonally adjusted 0.4% for the month, putting the 12-month increase at 3.4%, the Bureau of Labor Statistics reported Friday.

While the data was largely in line with expectations, it’s worth emphasizing that if we exclude food and energy, and look at what’s known as core CPI, prices rose 0.3% last month, which was worse than expected. For the fifth month in a row, inflation has climbed faster than wages, squeezing consumers already struggling with an affordability crisis.

What’s more, The New York Times reported, “It’s worth noting that these stubborn inflation numbers predate the recent sharp rise in oil prices, with Brent crude, the international benchmark, up 15% in September to roughly $105 per barrel. Oil price changes take a little time to flow through into higher energy costs, higher prices at the pump and higher prices for other petroleum products.”

In other words, the data from August was discouraging, and September is on track to be even worse.

Justin Wolfers, an economist at the University of Michigan, noted in response to the latest figures, “Prices are still rising at an uncomfortably high rate.”

The CPI data comes on the heels of similarly discouraging data on the producer price index, which also followed discouraging news on the personal consumption expenditures price index, which the Federal Reserve uses as its preferred forecasting tool.

The president can continue to say “Inflation is way down. Everything is great. The prices are coming down,” but telling Americans not to believe their own wallets tends to be a bad idea, especially in an election year.

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