Sept. 17, 2012 – A surge in gas prices powered August’s consumer price index to its largest increase since June 2009, but NAFCU is expecting pump prices to come down this fall.
The Bureau of Labor Statistics reported Friday that the overall CPI rose 0.6 percent in August, the first increase in five months. NAFCU Staff Economist Curt Long said the increase was “hardly surprising” given the recent rise in gas prices. “That has put a dent in consumers’ pocketbooks and is yet another weight on overall consumer spending,” he said.
All told, energy prices rose 5.6 percent in August, gas prices rose 9 percent and food prices increased 0.2 percent.
On a year-over-year basis, the overall CPI increased 1.7 percent, up from 1.4 percent the previous month. From August 2011, energy prices were down 0.6 percent, gas prices were up 1.8 percent and food prices were up 2 percent.
Core prices, which exclude food and energy costs, rose 0.1 percent in August, the same increase in July. On a year-over-year basis, core CPI grew 1.9 percent, down from July’s pace of 2.1 percent. Long said core inflation remains well below the Federal Reserve’s stated 2 percent target, and the central bank continues to reiterate that inflation poses little risk to the economic recovery.
If gas prices decline this fall, as NAFCU expects, it remains to be seen what consumers will do with the money they aren’t spending on gas, Long said. “With consumers feeling understandably anxious about the labor market and the sluggish economy, it might not translate into spending in other areas.”
For more, see NAFCU’s Macro Data Flash.