WASHINGTON – The seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U) fell 0.1 percent in August, in its first month-over-month decline since October, according to a report today from the U.S. Department of Labor’s Bureau of Labor Statistics. The index had risen 0.1 percent in July.
The decline surprised analysts, according to Bloomberg News, whose survey of 79 economists predicted prices would be unchanged from July. (Estimates ranged from a decline of 0.3 percent to an increase of 0.3 percent.)
The core CPI excluding food and energy rose 0.2 percent in August, the same as in July, matching the survey’s prediction. Food prices rose 0.4 percent. The energy index declined for the third straight month, falling 3.2 percent in August – its biggest decline since October – led by a 5.9-percent drop in gasoline prices and a 4.2-percent drop in natural gas.
“Core inflation has now been falling for nearly a year,” Ian Shepherdson, chief economist at High Frequency Economics LLC in Valhalla, N.Y., told Bloomberg News. “The Fed’s ease [of interest rates] yesterday was not a gamble.”
Compared with August 2006, the CPI rose 2.0 percent to 207.917 points (1982-1984 = 100). Food prices rose 4.3 percent and energy declined 2.5 percent, while the core CPI rose 2.1 percent from its year-ago level.
Meanwhile, American workers’ real average weekly earnings (adjusted for inflation) rose 0.5 percent in August compared with the month before, after falling 0.1 percent in July, the BLS said in a separate report. The total was boosted by a 0.3-percent rise in average hourly earnings and a 0.2-percent decline in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W); average weekly hours were unchanged from July.
Compared with August 2006, real earnings increased 3.9 percent. Before adjustment for seasonal changes and inflation, weekly earnings averaged $591.26 last month, compared with $570.83 a year earlier.
In the Northeast, the BLS said in a separate report this afternoon, the CPI-U was 221.559 points (1977 = 100), an increase of 1.6 percent from its level in August 2006. The regional energy index fell 2.2 percent, year-over-year, as a 7.0-percent decline in gasoline prices and 1.1-percent decline in natural gas costs more than offset a 4.8-percent rise in electricity prices. The food index rose 4.3 percent.
Meanwhile, BLS said, the Northeast’s core CPI excluding food and energy fell 2.2 percent from its level in August 2006.
Additional information, including the 20-page Consumer Price Index report, is available from the U.S. Department of Labor’s Bureau of Labor Statistics at www.bls.gov/cpi; the five-page Real Earnings report can be found at www.bls.gov/ces.
