Following higher gas prices, inflation rose in August 3.7% from 12 months earlier, reported CNBC News. Fortunately, according to economists quoted by CNBC News, the inflation increase will likely be temporary.
“This should just be a temporary interruption of the downward trend,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics. “Broadly, we’re already seeing pretty clear signs the situation is approaching normal again.”
The consumer price index (CPI) shows that gasoline prices jumped 10.6% in August, adjusted for seasonal trends. According to a news release from the U.S. Bureau of Labor Statistics, “gasoline was the largest contributor to the monthly all items increase.”
Dynamics in the market for crude oil are largely responsible for the increase in price, Hunter said. He added, while rising gasoline prices may be challenging for consumers from a budgetary perspective, it’s unlikely they’ll be sustained beyond another month or two, reported CNBC News.
While gasoline prices have risen in the short term, they’ve declined 3.3% from a year ago.
CNBC News states that economists generally like to look at one measure that strips out energy and food prices, which tend to be volatile month to month, to assess underlying inflation trends. This measure, known as “core” CPI, rose slightly in August, increasing to 0.3% from 0.2% in July.
The increase in monthly core CPI “is a little bump in the road,” said Kayla Bruun, senior economist at Morning Consult.
“It doesn’t mean it’s turning around and going in the other direction,” Bruun said. “Overall, most of the pieces are headed in the right direction.”
Multiple factors caused the recent inflation trends, including after-effects of the pandemic, supply chain issues and wage growth in the hot labor market. However, those trends have largely wound down, according to Hunter. Wage growth, while still high, is coming down, and the labor market is easing.
As the labor market opens up again, Walmart has taken steps by restructuring its hiring practices, which includes cutting pay for starting employees.