Inflation in the United States took a breather in August, dropping from its 13-year high. Even so, price increases are still uncomfortably high compared to before the pandemic.
Prices rose 5.3% in August year-on-year, slightly less than the 5.4% increase recorded in June and July, the Bureau of Labor Statistics reported Tuesday. If more volatile items such as food and energy are excluded, prices rose 4%, also a smaller increase than in July.
In August alone, prices rose by 0.3% adjusted for seasonal variations. It was the second month in a row that the inflation rate fell slightly. Excluding food and energy, prices rose 0.1% for the month, the smallest increase since February.
The prices of airline tickets and car insurance fell in August. And used car prices fell in August for the first time since February.
In the past 12 months, used car prices have risen an astonishing 31.9%. Demand for used cars has skyrocketed throughout the pandemic as people sought alternatives to public transportation. In addition, the production of new cars has been hampered by the global shortage of chips, also affecting prices.
Inflation is still well above the Federal Reserve’s target of around 2%. The Federal Reserve has signaled that it intends to reduce some of its emergency economic stimulus imposed last year when the pandemic began.
This could keep inflation under control. But it also runs the risk of slowing the economy when the delta variant appears to hamper job growth.