Price Increases Persist Despite Supply Chain Progress

By Dean Baker / Beat the Press/CEPR

The overall Consumer Price Index rose 0.1 percent in August, core was up 0.6 percent; up 8.3 percent and 6.3 percent year-over-year, respectively. Overall, the picture shows inflation persisting in a wide variety of areas where it seems that supply chain issues are being overcome. This is not a good story.

Food at home prices went up 0.7 percent in August, 13.5 percent year-over-year. Beef, chicken, and milk were up 0.8 percent, 0.5 percent, and 0.2 percent, respectively. These rises are somewhat surprising since price indexes had shown declines.

Car prices are still rising sharply: new vehicles up 0.8 percent in August, 10.1 percent year-over-year, added 0.03 percentage points to the month’s inflation.

The car and truck rental index was down 0.5 percent in August, 6.2 percent year-over-year. This implies that rental agencies have rebuilt fleets and more cars are available for households. The index is still up 39.9 percent from its pre-pandemic level.

Car insurance went up 1.3 percent in August, 8.7 percent year-over-year.

The health insurance index (profits and expenses, not premiums) went up 2.4 percent in August, up 24.3 percent year-over-year.

Car and health insurance together added 0.05 percentage points to the month’s inflation.

Prescription drug prices were up 0.4 percent in August, 3.2 percent year-over-year.

Both rental indexes rose 0.7 percent in August: rent proper up 6.7 percent year-over-year, owners’ equivalent rent up 6.3 percent. The divergence in rental inflation continues with expensive cities seeing smaller rises: San Francisco, New York City, and DC were up 1.9 percent, 2.9 percent, and 3.1 percent year-over-year, respectively. Detroit was up 6.7 percent, Atlanta 13.5 percent, and Phoenix 21.4 percent.

College tuition rose 0.5 percent in August, up 2.8 percent year-over-year.

Apparel prices were up 0.2 percent in August, 5.1 percent year-over-year.

Appliance prices fell 1.2 percent after dropping 0.6 percent in July, but are still up 3.0 percent year-over-year. Supply chain issues are being overcome.

Dean Baker

Dean Baker co-founded CEPR in 1999. His areas of research include housing and macroeconomics, intellectual property, Social Security, Medicare and European labor markets. He is the author of several books, including Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. His blog, “Beat the Press,” provides commentary on economic reporting. He received his B.A. from Swarthmore College and his Ph.D. in Economics from the University of Michigan. Dean previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He has also worked as a consultant for the World Bank, the Joint Economic Committee of the U.S. Congress, and the OECD’s Trade Union Advisory Council. He was the author of the weekly online commentary on economic reporting, the Economic Reporting Review (ERR), from 1996–2006.