After months of slowing, inflation is rising again, new data finds, posting the biggest gain in the past year.
The yearly rate of inflation climbed to 3.7 percent in August from 3.2 percent in July and from a 27-month low of 3 percent in June, before seasonal adjustment, according to the Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics (BLS), released this morning.
On a monthly basis, the CPI rose 0.6 percent in August, seasonally adjusted.
The hike is attributed mostly to rising oil prices. The index for gasoline was the largest contributor to the monthly all items increase, accounting for more than half of the increase, the BLS said. Also contributing to the August monthly increase was continued advancement in the shelter index, which rose for the 40th consecutive month. The energy index rose 5.6 percent in August, while food index increased 0.2 percent in August. The food index rose 0.2 percent over the month while the index for food away from home rose 0.3 percent in August.
Still, year-over-year, despite the rise the past two months, inflation has largely cooled from when it peaked last summer at 9.1 percent.
Research has indicated that although it's less severe than it was, a reprieve on slowing inflation isn't being felt yet among employees.
"While the rate of inflation has started to come down, the compounding impacts of rising costs over time and still-high prices for many products continue to weigh on workers," said Marci Stewart, director of communication consulting and participant education for Schwab Workplace Financial Services.
A recent report from Charles Schwab, which surveyed 1,000 U.S. 401(k) plan participants, in fact found that 62 percent of workers see inflation as an obstacle to saving for a comfortable retirement—a big jump from 45 percent last year.
"It's no surprise that the persistence of these conditions has made workers second-guess their retirement prospects," Stewart said.
The latest BLS consumer price index report comes on the heels of the BLS' latest Employer Costs for Employee Compensation report, which found that employers spent more on employees' overall compensation from March to June this year, but the pace at which they are hiking total compensation is slowing.
Employers have largely boosted wages as a response to inflation, although pay hikes are starting to show signs of cooling as well, especially as employers worry about economic conditions.
Real average hourly earnings increased 0.5 percent, seasonally adjusted, from August 2022 to August 2023, the BLS reported separately today. The change in real average hourly earnings combined with a decrease of 0.3 percent in the average workweek resulted in a 0.3-percent increase in real average weekly earnings over this period.