WASHINGTON: The United States saw inflation climb slightly above expectations in August, driven by sales of used cars and recreation equipment as well as gasoline prices' continued recovery, government data showed Friday.
The Labor Department's consumer price index (CPI) fell into the negative for three months starting in March as the coronavirus pandemic slammed the global economy, causing a huge drop in crude prices amid oversupply concerns as well as sharp pullbacks in consumer spending in some areas.
However, recent months have seen the indicator recover, and August's month-on-month growth of 0.4 percent, seasonally adjusted, was down from the 0.6 percent rise seen in July.
Used cars and trucks drove the growth with a 5.4 percent gain, while gasoline rose 2.0 percent, though that was less than its 5.6 percent rise in July. Recreation jumped 0.7 percent after spending the past two months in negative territory, while airlines fares rose 1.2 percent over the month, reflecting consumers' continued return to spending and travel habits as lockdowns to stop the spread of Covid-19 eased.
However, education fell 0.3 percent, which the Labor Department said was its first decline since the index started in 1993, while personal care fell by the same amount after rising in June and July.
Kathy Bostjancic of Oxford Economics credited the jump in used car prices, their biggest since 1969, to city dwellers looking for ways to avoid public transportation or move out of town permanently, while predicting the boost wouldn't last.
"Despite the stronger-than-expected monthly advance in CPI in the past two months, we continue to foresee the slow recovery in aggregate demand keeping the pace of inflation contained in the coming months," she said in an analysis.
Year-on-year, inflation was up 1.3 percent, gaining from its 1.0 percent rate seen in July, and the so-called core index excluding food and energy was also up 0.4 percent, seasonally adjusted, in August, above expectations.