CUNA Senior Economist Dawit Kebede issued the following statement in response to the Labor Department’s August Consumer Index Report:    

“The headline inflation increased slightly by one-tenth of a percentage point in August after staying flat in July. Prices declined for gas, used cars, and air travel. However, these declines are offset by increases in housing, food, and health care. Prices are 8.3% higher than a year ago, down from 8.5% in July.  

“Core inflation, prices excluding food and energy, rose in August. The increase in new car prices indicates continued shortages with production and labor; the auto sector is struggling to bring output back to its pre-pandemic level. Currently, there is a gap of 3 million in total vehicle sales compared to 2019. The index for shelter increased by 0.7 percent in August. High housing prices observed in the last year continue to show up in the consumer price index. 

“Despite indications of a slow-down in headline inflation in the last two months, it is still much higher than the Federal Reserve's target of 2%. The Federal Reserve Open Market Committee is expected to raise rates by another 75 basis points during their meeting this month. This raises the target rate between 3% - 3.25%. The economy is heading into a more restrictive interest rate environment with two more expected hikes in November and December.”