CEPR - Center for Economic and Policy Research
Home

Core Inflation Edges Higher in August

Print
September 19, 2007 (Prices Byte)

Core Inflation Edges Higher in August

Prices Byte by Dean Baker

For Immediate Release: September 19, 2007
Contact: Alan Barber, (202) 293-5380 x115

"The price of imports from China has risen at a 4 percent rate over the last quarter."

The core inflation rate was 0.2 percent in August driven by large increases in the cost of medical care and education. This is the third consecutive month that the core index has risen by 0.2 percent, bringing the annual rate of inflation in the core index over the last quarter to 2.5 percent. This is up slightly from a 2.1 percent rate over the last year. The overall CPI fell by 0.1 percent in August, driven by a sharp decline in energy prices. The overall index has grown at just a 0.7 percent rate over the last quarter, down from a 2.0 percent rate over the last year.

Medical care costs rose 0.5 percent in August following a 0.6 percent jump in July. They have risen at annual rate of 5.6 percent over the quarter, up from a 4.5 percent rate for the last year. Education costs also rose by 0.5 percent in August. They have risen at a 5.1 percent annual rate for the quarter, almost the same as the 5.5 percent rate over the last year.

On the low side, apparel prices fell by 0.5 percent in August, bringing the rate of price decline for this component over the last quarter to 2.8 percent. It is likely that apparel prices will rise slightly or at least flatten in the months ahead. Both rent indexes rose by 0.2 percent in August, with price increases held down by the glut in the housing market. The owners’ equivalent rent index has risen at a 2.4 percent annual rate over the last quarter. The rent proper index, which includes utilities costs, has risen at a 2.9 percent annual rate.

Read more...