Inflation & gas prices

September 14, 2022
Photo of the produce section at a grocery store

Today’s CPI reading is a stark reminder of the long road we have until inflation is back down to earth.

Mike Loewengart, Morgan Stanley’s Global Investment Office. The new CPI data for August shows that underlying inflation increased while typical indicators, such as gas, decreased.

Why It Matters: The Consumer Price Index, which measures inflation, rose just 0.1% in August but is still more than 8% higher than it was this time last year. The number indicates that price increases are becoming more "broad-based" but "longtime drivers of inflation" are slowing down.

  • The Federal Reserve has raised interest rates four times this year in order to slow down spending and combat rising inflation. Their goal is to slow rising prices while not hurting the economy too much.
  • The latest data indicates that food, medical care, transportation, and rent are currently most impacted by inflation; rent "is the most stubborn of everything the Fed is fighting at this point,” said Quincy Krosby, chief equity strategist at LPL Financial.
  • Despite widespread increases in other commodities, gas prices went down by 10% in August. The current average price per gallon is $3.70; the national average was $3.96 one month ago.
  • Big Picture: “One of the most remarkable things is how broad-based the price gains are. The underlying trend in inflation certainly has not shown any progress toward moderating so far … price gains have become increasingly demand-driven, and therefore likely to be more persistent," said Matthew Luzzetti, chief U.S. economist at Deutsche Bank.

Consumer Price Index Summary (U.S. Bureau of Labor Statistics)

Driven by consumers, US inflation grows more persistent (The Associated Press)

Inflation rose 0.1% in August even with sharp drop in gas prices (CNBC)

by Jenna Lee,