PREVIEW: What to Look for in the August Consumer Price Index

09/13/2021 12:00am

(The monthly Consumer Price Index (CPI) is scheduled for release by the Bureau of Labor Statistics on Tuesday, September 14th at 8:30 AM Eastern Time.)

The CPI, and especially the core CPI, has been buffeted in recent months by large movements in components that are a relatively small share of the index. In May and June, large jumps in apparel prices, hotel prices, and air fares, as well as used and new car prices, led to large rises in both the overall and core CPI. New vehicle prices again rose rapidly in July (1.2 percent), while used vehicle prices rose a modest 0.2 percent. But inflation in the core index was slowed by a sharp 2.8 percent for the car insurance index, as well as flat prices for apparel.

It is likely that we will see further moderation in these components in August. There is some indication used car prices may actually fall somewhat in August and any increases in new car prices are likely to be moderate. The other components are likely to show small, if any, price increases in the month, especially if the Delta variant is having a big economic impact, as many believe.

Rent is, of course, a huge portion of the index. Rent increases have remained moderate even as house prices have soared during the pandemic. One factor that will be putting downward pressure on rents is the ending of the eviction moratorium, although that will have more of an impact in September and October than November.

The core index is likely to show the same 0.3 percent rise as in July, with the overall CPI likely pushed somewhat higher by rising food prices. With extreme weather conditions damaging crops in many areas, we may be seeing rising food prices for some time. 

CEPR produces same-day analyses of government data on employment, inflation, GDP and other topics. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.

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