UPDATE 2 - US consumer inflation annually rises 2.5% in August, slowest increase since February 2021

UPDATES WITH COMMENTS OF NATIONAL ECONOMIC ADVISOR

By Ovunc Kutlu

ISTANBUL (AA) - Consumer inflation in the US annually rose 2.5% in August, marking the slowest annual increase since February 2021, according to data released Wednesday.

The consumer price index (CPI), which measures changes in the prices of goods and services from a consumer's perspective, came in line with market estimates, and showed a significant slowdown from a year-on-year increase of 2.9% recorded in July.

The figure is also a sharp decline from the 9.1% annual gain recorded in July 2022, which was the highest since November 1981.

On a monthly basis, CPI showed an increase of 0.2%, and came in line with market expectations, following also a 0.2% gain in July.

"The index for shelter rose 0.5 percent in August and was the main factor in the all items increase," the Labor Department's Bureau of Labor Statistics said in a statement.

"The food index increased 0.1 percent in August, after rising 0.2 percent in July," it added. "The energy index fell 0.8 percent over the month, after being unchanged the preceding month."

Core CPI, which excludes volatile food and energy prices, gained just 0.3% in August from the previous month, coming in higher than market estimates of 0.2%, but slightly gaining pace from the 0.2% increase in July.

Annually, core CPI climbed 3.2% in August, coming in line with expectations, and following a 3.2% year-on-year gain recorded in July.

- Housing, gas, electricity

The shelter index annually showed a gain of 5.2% in August, accounting for over 70% of the annual increase in core CPI, according to the US agency.

"The index for owners' equivalent rent rose 0.5 percent over the month and the index for rent increased 0.4 percent," said the bureau. "The lodging away from home index rose 1.8 percent in August, after rising 0.2 percent in July."

The energy index, on the other hand, decreased 0.8%, after being unchanged in July.

While the gasoline index declined 0.6% on a monthly basis, it plummeted 10.3% year-on-year.

The electricity index, meanwhile, fell 0.7% last month, and the index for natural gas decreased 1.9%.

The medical care index declined 0.1%, after falling 0.2% in July.

- Close to level month before pandemic

The US National Economic Advisor Lael Brainard said consumer inflation has fallen close to a level the month before the coronavirus pandemic started.

"With inflation coming back down close to normal levels, it is important to focus on sustaining the historic gains we have made for American workers during this recovery," she said in a statement released by the White House.

She noted that President Joe Biden and the Vice President Kamala Harris are fighting to lower costs, expand opportunities, and grow the middle class in the US.

"That means creating jobs and supporting small businesses in communities across the country. It means cutting taxes for middle class families and hardworking Americans, while asking billionaires and large corporations to pay their fair share to reduce the deficit. And it means making housing, health care, and prescription drugs more affordable," she added.

Brainard argued that Congressional Republicans would raise costs by nearly $4,000 per family while cutting taxes for the ultra-wealthy individuals.