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The Financial Express
Swasti Lankabangla Swasti Lankabangla

US consumer prices surge for 3rd month in August

| Updated: September 17, 2020 11:01:32


File photo used for representational purpose File photo used for representational purpose

US consumer prices continued to rebound in August with the reopening of the world largest economy, but the overall inflation is expected to remain subdued due to the pandemic.

The consumer price index (CPI) increased 0.4 per cent in August after jumping 0.6 per cent in July, the Labor Department reported Friday. That marked the third straight month of gains for consumer prices.

Excluding the volatile food and energy categories, the so-called core CPI rose 0.4 per cent in August, driven by a surge in used auto prices, according to the department, reports Xinhua.

"Any fears of pandemic triggering deflation should be calmed by the definitive rebound in prices the past few months. But inflation is not about to take off either. The pickup in core inflation is more mean reversion than the start of a trend," Sarah House, senior economist at Wells Fargo Securities, wrote Friday in a note.

"Measures like the Median CPI and Sticky CPI that present an alternative way of gauging the underlying trend in inflation besides excluding food and energy suggest the overall trend is more stable than the traditional core has indicated recently," House wrote, expecting core CPI to remain subdued over the next couple of years.

"We expect inflation will struggle to meet the Fed's 2.0 per cent target over the next two years, let alone run higher for a time in order to bring inflation to 2.0 per cent on average. In other words, it is a long time before inflation becomes an issue for the Fed," she noted.

US Federal Reserve Chairman Jerome Powell announced last month that the central bank will seek to achieve inflation that averages 2.0 per cent over time, a new policy strategy that will likely keep short-term interest rates near zero for years.

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