August’s inflation rate, as measured by the consumer price index, rose 8.3%. On the face of it, this was an improvement over the 9.1% rate in June and 8.5% in July. However, the number can be misleading. Gas, oil and fuel oil prices have fallen sharply in recent weeks. Excluding these, inflation is near four-decade lows.
Although they were indeed exceptions, for very few products and services, prices fell. And the prices of smartphones are falling.
On a broader basis, a decline in fuel prices should not be dismissed. American families and many businesses were financially squeezed three months ago when average nationwide gasoline prices hit a record $5 per gallon. Fortunately, this number has recently dropped to $3 per gallon. Still, oil prices remained high in August compared to last year, even though these prices were unusually low.
Food prices continued to be the most vexing inflationary issue for many Americans. For example, the price of butter rose by 25% last month. The price of eggs was almost 40% higher year-on-year in August. (This Most people in every state need food stamps.)
Unfortunately, most of the items whose prices fell in August year-over-year were non-essential. Smartphone prices reduced by 20%. Despite the release of the new iPhone 14, most people don’t need a new smartphone on a regular basis. The price of televisions is almost reduced.
Computer software and computer hardware prices also fell. Again, these are not prices that ordinary Americans experience on a regular basis. (Probably not buying non-essentials, this How long a common person can survive on savings in each state.)
Broadly speaking, a fall in the prices of some goods and services means almost nothing to the broader problem of inflation. More and more Americans can’t afford essentials, and with rising prices this is especially true for people without wages. Even middle-class Americans face high costs of living, and their discretionary income may come under pressure.
The solution to lower prices for the higher number of units in the CPI is probably higher unemployment. As skyrocketing costs cut into consumer spending — and with it corporate profits — these problems, in turn, trigger layoffs. America has not been in an economic cycle like this for over a decade. Unfortunately, one big problem may have to be replaced by another.
To determine the 13 household items that are sinking in price, 24/7 Wall St. examined the Consumer Price Index Summary August report from the Bureau of Labor Statistics. Prices are compared to August 2021.
Click here to see prices of this household item falling.