The Consumer Price Index witnessed a significant rise of 3.7% in August, highlighting a 0.6% increase from July, , according to a report released from the Bureau of Labor Statistics. This surge, the largest monthly gain since June 2022, was majorly influenced by soaring energy costs. Despite the conclusion of the summer peak season expected to bring down gas prices, they have remained notably high, contributing substantially to the overall inflation figures. If energy prices are excluded, the core CPI inflation settles at 4.3%.
August saw a 0.2% rise in the food index, mirroring the increment in July. On an annual scale, grocery prices or food-at-home costs are up by 3.0%, slightly down from July’s 0.3% growth. Contrarily, restaurant inflation or food-away-from-home prices showcased a 6.5% year-over-year surge after a 0.3% rise in August. Though these menu prices persistently remain high, the current figures are somewhat less than those recorded at the beginning of the year and the previous year. Specifically, prices for limited-service meals rose by 6.7% year-over-year, whereas full-service meals marked a 5.2% yearly growth. This gradual decrease indicates some relief in commodity costs.
Remarkably, for the past six consecutive months, restaurant inflation, or menu prices, have consistently surpassed grocery inflation. Analyst Mark Kalinowski pointed out a steady gap of 350 basis points between them in August. Historically, the difference averages around 60 basis points. Owing to this widening disparity, Kalinowski anticipates a drop in same-store sales for Q3 and Q4 as compared to Q1 and Q2.
This inflationary data from August will play a pivotal role in the Federal Reserve’s forthcoming decision on interest rate adjustments, especially considering the initiation of these hikes in 2022 when inflation touched 40-year peaks, now exceeding 5%.
