Economy Watch: Price Hikes Modest, Household Worth Up
- Sep 19, 2016
Inflation is still a fairly modest consideration for the U.S. economy, though in some ways, it was a bit higher in August. The Bureau of Labor Statistics reported on Friday that the Consumer Price Index increased 0.2 percent in August. Over the last 12 months, the all items index rose only 1.1 percent.
Energy and food didn’t drive even the modest increase in prices in August, and the overall price of energy and food was actually unchanged in August. The price of natural gas was up, but declines in gasoline and fuel oil prices offset that. As for food, the price of at-home food declined for the fourth month in a row, offsetting an increase in the price of food away from home.
Take food and energy out of the equation, and prices were up 0.3 percent in August, with the price of shelter (rents, mainly) and medical care advancing. Prices in a lot of other categories were down, such as for used cars and trucks, household furnishings and operations, recreation and airline fares. Even so, the CPI less food and energy rose 2.3 percent for the 12 months ending in August, higher than in recent months.
The modest level of inflation, along with last week’s report about income gains for U.S. households, ought to be encouraging news for retailers and their landlords going toward the holiday season. In theory at least, as households feel richer, they tend to spend more.
Also good news: Separately on Friday, the Federal Reserve reported that the net worth of U.S. households and nonprofits rose to $89.1 trillion during the second quarter of 2016. As a percent of GDP, household net worth is now higher than the peak in 2006, which was the peak of the housing bubble.