According to Bureau of Labor Statistics data, the headline consumer price index rose 3.4% year over year in August, consistent with market expectations and the same as in July. The gasoline price index rose 3.9% month over month in August, accounting for more than one third of the monthly increase for the headline inflation. The core inflation, excluding volatile food and energy prices, came in at 2.4% year over year, slightly down from 2.5%, in line with expectations.
The ABA Office of the Chief Economist believes that August’s CPI highlighted the affordability challenge households face when gasoline prices were substantially higher than a year earlier. Continuing inflationary pressure could weigh on consumer and business sentiment, erode purchasing power and dampen real economic growth. This could be a headwind for loan demand, particularly for interest rate-sensitive products such as mortgages and auto loans.
