Concord, New Hampshire – The American Institute for Economic Research’s Everyday Price Index (EPI) dropped by 0.13 percent to 290.9 in August 2024, maintaining the same level as in April and May of that year. This decline in the index represents the second consecutive monthly decrease seen in 2024, following a previous drop in June.

Among the twenty-four EPI constituents, seven experienced a decline, one remained unchanged from the previous month, and sixteen saw an increase in prices. On September 11, 2024, the US Bureau of Labor Statistics (BLS) released Consumer Price Index (CPI) data for August 2024. The month-to-month headline CPI number rose by 0.2 percent, meeting predictions made by surveys. The core month-to-month CPI number showed a higher increase of 0.3 percent, exceeding the forecasted 0.2 percent rise.

In August 2024, housing costs increased by 0.5 percent, significantly contributing to the overall rise in the all-items index. Food prices saw a modest 0.1 percent increase, following a 0.2 percent rise in the previous month. Energy costs experienced a notable 0.8 percent decrease after remaining unchanged in the prior month. Excluding food and energy, the core index witnessed a 0.3 percent uptick in August, slightly exceeding the 0.2 percent increase recorded in July.

Year-over-year data showed that the headline CPI rose 2.5 percent, meeting forecasts, while the core CPI rose by 3.2 percent, aligning with the predicted 3.2 percent increase. Over the 12-month period ending in August, the all-items index increased by 2.5 percent, marking the smallest year-over-year increase since February 2021. The core index (excluding food and energy) rose by 3.2 percent during the same period.

Changes in freight prices historically lead to price adjustments in core goods inflation by six to twelve months. Despite rising freight costs, housing rents and auto insurance prices remained elevated. Looking at persistent inflation in auto and home insurance sectors, it is essential to note that these categories are only marginally influenced by the business cycle. Medicare service costs are also expected to rise in the coming year.

In light of recent data, the probability of a 50-basis point rate cut at the September 18 meeting of the Federal Open Market Committee (FOMC) has significantly diminished, and it is anticipated that inflation in the United States will end 2024 above the Federal Reserve’s target range. Potential justifications for easing the monetary policy stance in the next quarter or two are likely to arise from worsening labor market conditions alone.