The August 2023 report of the Consumer Price Index of All Urban Consumers (CPI-U) indicates that inflation jumped higher this month than any preceding month this year. The CPI-U increased by 0.6% on a seasonally unadjusted basis in August 2023, according to the Bureau of Labor Statistics report published September 13, 2023. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 3.7%, marking a significant surge compared to July’s 3.2% and June’s 3.0% reading.
August’s CPI report came in hotter than expected according to a Dow Jones poll that found that most economists and analysts forecasted a 0.2% month-over-month increase.
Financial markets opened on Wednesday at a loss following August’s inflation news. The Dow Jones Industrial Average is down 32.46 points as of 10:30 a.m. on Wednesday, and the NASDAQ is down by 19.54 points. This marks the second consecutive month in which the U.S. headline inflation and core inflation rates have accelerated, following a gradual period of deceleration that lasted from mid-2022 to July of this year.
The main drivers of inflation according to August’s inflation report are gasoline prices (constituting over half the headline increase) as well as housing and shelter costs. Zooming out, present inflationary conditions are continuing to drift further away from the Federal Reserve’s target inflation rate of 2%—a policy aspiration that appears to be more and more out of reach without further rate hikes from the Federal Open Market Committee.
Source: Bureau of Labor Statistics
August’s monthly CPI figure far outpaces that of July (0.2) while also outpacing June’s reading (0.2). This provides concrete evidence that price acceleration is not only occurring, as it was in July, but it also gaining steam and appearing to have some degree of longevity. As depicted in the table above, the August 2023 CPI figure was largely driven by increases in energy commodities, specifically gasoline (10.6) and fuel oil (9.1), as well as transportation services (2.0) which rely heavily on energy resources. Due to base year effects, these energy increases arrive in stark contrast against July’s inflation report which found rapidly decreasing costs of fuel oil (-26.5), energy commodities (-20.3), and gasoline (-19.9).
Food Prices
In August, the food index rose by 0.2 percent, the same marginal increase seen in July. Notably, the index for food at home increased by 0.2 percent, representing a decline from July’s rise in the same index by 0.3 percent. Important price decreases include dairy and related products, which declined by 0.4 percent, as well as the nonalcoholic drinks and fruits and vegetable indices which both declined by 0.2 percent.
Year-over-year, the food away from home index 0.3 percent in August, a notable cool-off compared to July’s 0.7 percent. However, the food at home index rose by a considerably larger margin, hitting 3.0 percent growth this month.
Energy Prices
Following a modest gain of 0.1 percent in July, the energy index rose by a remarkable 5.6 percent in August. This is largely due to the gasoline index rising by 10.6 percent in August and the electricity index rising by 0.2 percent.
On an annual basis, however, the energy index fell by 3.6 percent. This indicates that short-run energy costs are rising while the longer-term trends indicate a decline from last year’s price levels.
Core August 2023 CPI
Regarding the core CPI data for August 2023 (inflation less food and energy), the index rose 0.3 percent month-over-month. This marks an increase from July and June’s core CPI acceleration of 0.2 percent. Below is an itemized breakdown of the main price fluctuations seen in August’s core CPI reading:
- Shelter index: +0.3% (+0.4% in July)
- Motor vehicle insurance: +2.4% (+2.0% in July)
- Rent index: +0.5% (+0.4% in July)
- Lodging away from home: (-3.0%)
- Prescription drugs index: +0.4%
- Hospital services: +0.7%
- Medical care index: +0.2% (-0.2% in July)
Source: Bureau of Labor Statistics
Seasonally Unadjusted CPI Data for August 2023
Before seasonal adjustments, the CPI-U for August 2023 increased (+3.7%) year-over-year, rising to an index level of 307.026. Since these figures are unadjusted, they include regular seasonal price fluctuations that generally occur by the same margins every year.
Source: Bureau of Labor Statistics
Get Ahead of Inflation This Autumn: Protect Your Wealth
August’s inflation numbers indicate that price increases are once again accelerating in America. The U.S. dollar’s value is declining day by day as more money enters circulation and consumer goods and services cost more to produce and get to market. The end result is that every American family has less purchasing power compared to the previous month, making it increasingly difficult to manage expenses, make ends meet, and save for retirement. All the while, personal debts are rising—in fact, America’s total credit card debt now exceeds $1 trillion.
Fortunately, you have the power to counteract the negative effects of inflation. Consider consulting with a financial expert to diversify your investment portfolio by including various asset types. These alternative investments have the potential to shield your savings from the diminishing value of the U.S. dollar.
During times of economic turbulence, like the 2020 stock market crash and the 2008 global financial crisis, historical data suggests that assets like gold and silver have outperformed conventional securities. For many, gold serves as a safeguard against inflation, offering a dependable store of value when traditional assets falter. Notably, accomplished investors such as Ray Dalio and Kevin O’Leary regard it as a valuable risk management tool.
Interested in embarking on a gold or silver investment journey? You can get started by establishing an account with one of the top-rated gold IRA service providers. In the meantime, stay vigilant about inflation trends in the coming months. Our complimentary CPI inflation calculator tool is accessible to help you monitor how inflation affects your purchasing power within your household. It effectively tracks the erosive impact of inflation, keeping you well-informed when preparing for your financial future.
Liam Hunt, M.A., is a writer specializing in finance and international affairs. His articles have appeared in the Toronto Star, Ottawa Citizen, and Vancouver Sun, and his expert commentary has been featured in Forbes, Bloomerg, Barron's, and the New York Post.
