US Inflation Cools in August 2022

The United States (US) inflation rate eased, declining for two consecutive months in August 2022.

The US Bureau of Labor Statistics (BLS) reported a 0.1% inflation rate in August 2022 (month-to-month/m-to-m). Food prices increased by 0.8% (m-to-m), while energy prices deflated by 5% (m-to-m).

Compared to August 2021, the US inflation rate reached 8.3% (year-on-year/yoy). Food prices experienced an 11.4% inflation rate (yoy), with a breakdown of 11.4% (yoy) for food at home and 13.5% (yoy) for food away from home.

Energy price inflation was 23.8% (yoy), with energy commodity inflation at 27.1% (yoy) and energy services inflation at 19.8% (yoy).

This high inflation prompted the US central bank (Federal Reserve/The Fed) to implement monetary tightening by raising its benchmark interest rate to the range of 2.25-2.5%.

Given the persistently high inflation, The Fed is likely to raise its benchmark interest rate further at its next Board of Governors meeting scheduled for September 20-21, 2022. Current inflation remains far above the target of 2%.

Previously, US inflation reached its highest level in four decades at 9.1% (yoy) in June 2022. The rise in global energy and food commodity prices due to the Russian invasion of Ukraine fueled high inflation in many countries, including the United States.