WASHINGTON (AP) — United States (US) consumer prices rose 0.4 per cent in August as used car prices surged by the largest amount in 51 years, the Labor Department reported on Friday.
The August increase in the consumer price index reflected some moderation following big gains of 0.6 per cent in both June and July as the pace of energy price gains slowed.
However, there were still areas that showed bigger price increases, led by a 5.4 per cent jump in used car prices, the biggest monthly gain since March 1969. New car prices were unchanged in August but analysts predict prices are likely to rise in coming months, reflecting supply shortages. Motor vehicle production closed completely during the spring as the pandemic shut down wide swaths of the economy.
Other big gains were seen in household furnishings, which jumped 0.9 per cent, the largest monthly increase since February 1991. Prices of furniture, bedding and appliances all showed big gains.
Still, even with the recent gains, inflation increases over the past year are modest. Overall inflation is up 1.3 per cent while core inflation, which excludes energy and food, is up 1.7 per cent.
“Consumer inflation has been accelerating as economic activity has resumed and these readings bear watching for further acceleration even though the trend remains subdued against a backdrop of weak demand and excess capacity,” said Chief US Economist at High Frequency Economics Rubeela Farooqi.
Used car prices are up largely because auto sales crashed in March and April as factories and dealerships shut down to stop the spread of the coronavirus. With few new vehicles sold or produced for about eight weeks, there also were few vehicles being traded in, cutting off supplies.