According to the government, the personal consumption expenditure price index increased by 0.4 percent in August. It was the sixth consecutive significant increase. Inflation rose to 4.3 percent from 4.2 percent in the 12 months ending in August, the highest rate since George H.W. Bush was president in 1991.
What is the Consumer Price Index for August 2021?
For the 12 months ending August 2021, the Consumer Price Index for All Urban Consumers increased by 5.3 percent, a lower increase than the 5.4 percent increase for the year ending July. Prices for all items, excluding food and energy, increased by 4.0 percent in the last year, a smaller increase than in the previous year ended in July. Over the last 12 months, energy prices jumped by 25.0 percent, while food prices increased by 3.7 percent, both of which were higher than the rises for the year ending in July.
What will be the rate of inflation in 2021?
According to Labor Department data released Wednesday, the consumer price index increased by 7% in 2021, the highest 12-month gain since June 1982. The closely watched inflation indicator increased by 0.5 percent in November, beating expectations.
In September 2021, what is the expected inflation rate?
CPI inflation declined to 3.1 percent from 3.2 percent in the previous month. Inflation was predicted to fall due to a -0.4 percent “base effect” as the August-September 2020 inflation surge faded away (this spike of 0.4 percent was partly due to the rebound from the Eat Out to Help Out and VAT cut in August 2020). However, there was a significant element of additional inflation in addition to the base impact, with prices rising by 0.3 percent between September and August. This came after a significant increase of 0.7 percent in July-August.
The results were varied across sectors, with transportation and food showing rises and restaurants and hotels and clothing and footwear showing decreases.
When we take into account the reversal of VAT reductions in the hospitality sector, as well as the scheduled and expected future spikes in household energy prices indicated by OFGEM, we predict inflation to climb substantially in late 2021 and early 2022.
Inflation peaks at 4.7-5.3 percent in the first quarter of 2022, then drops to around 3.5 percent by September.
Because the September figure was slightly higher than projected, and we have built in a projection for the likely increase in the OFGEM price cap in April 2022, this peak is higher than we predicted last month.
- In September 2021, the CPI inflation rate was 3.1 percent, down from 3.2 percent in August. Part of the reason for this dip was the removal of 0.4 percent of old m/m inflation (August-September 2020) “o as a “foundation impact” Between August and September 2021, there was additional fresh inflation of 0.3 percent, which is high but not rare.
- The new monthly inflation figure of 0.3 percent for August-September comes after four months of high monthly inflation of 0.5-0.7 percent. The average monthly inflation rate from March to September was 0.45 percent, which is substantially above normal and would translate into an annual inflation rate of about 5.6 percent if sustained over a year.
- The consequences of the increase in the OFGEM price ceiling and increase in VAT on hospitality will be reflected in October’s pricing, resulting in a 1% or more increase in headline inflation. The impact of the 7.5 percent VAT hike on hospitality will be determined by how much the businesses pass on to customers, although it may be as much as 0.7 percent. With an increase of roughly 0.4 percent, the OFGEM increase is more predictable. Because the base effect for October is 0% (prices were unchanged from September to October 2020), the entire increase in inflation in October 2021 will be due to the base effect “In September-October 2021, the “new” inflation will begin.
- The primary contributions to the shift in inflation in August-September, when looking at different types of expenditure, were:
The sum of monthly inflation “dropping in” and “dropping out” for the type of expenditure multiplied by the weight of the expenditure type in the CPI index is used to calculate the contribution of each type of expenditure. The current month’s fresh inflation is reflected in the dropping in, while the inflation from August to September 2020 is reflected in the dropping out.
The decreasing in shaded light brown and the dropping out shaded light blue for the twelve COICOP expenditure categories used in CPI are shown in Figure 1, with the total given by the burgundy Line. The falling in and out reinforced each other in both Restaurants & Hotels and Recreation & Culture, but the dropping out of the rebound from EOHO was clearly overwhelming. The new and old inflation acted in opposite directions in Clothing & Footwear, but overall there was a modest decrease. Despite the fact that new inflation is negative, food and non-alcoholic beverages showed an increase overall. In the case of transportation, it was a similar pattern, with an overall gain caused by old inflation fading despite negative new inflation.
While the aggregate contribution of 10 of the 12 different types of expenditure was positive, the dropping in and dropping out operated in opposing directions in all situations except Restaurants and Hotels. The second exception was Education, which remained constant in all months except September and stepped in to contribute a very small 0.01 percent yearly contribution to inflation.
The prices of over 700 different goods and services sampled by the ONS show a wide range of behavior.
Some increase in value each month, while others decrease. Looking at the extremes, the top 10 items with the highest monthly inflation for this month are:
Table 2 shows the “Bottom Ten” items with the biggest negative inflation this month.
In both of these figures, we look at how much the item price-index for this month has risen in percentage terms since the previous month. Yang Li, a PhD student at Cardiff University, performed these computations.
We can look forward over the next 12 months to observe how inflation might change as recent inflation “drops out” month by month. Each month, fresh inflation is added to the annual number, while old inflation from the previous year’s same month “drops out.”
- The “middle” scenario implies that monthly inflation is equal to what would give us 2% per year 0.17 percent per month (the Bank of England’s aim and the long-run average over the last 25 years).
- The “high” scenario implies that monthly inflation is equal to 3% per year (0.25 percent pcm)
- The “very high” scenario – equivalent to 6% per year (0.4 percent pcm). This represents either the UK’s inflationary experience from 1988 to 1992 (when mean inflation was 0.45%) or recent US experience. It also represents the continuation of the current UKaverage in the UK over the months of March to September. This amount of high inflation would imply a substantial departure from inflation’s historical pattern from 1993 to 2020, as well as the Bank of England’s failure to control inflation.
What will be the CPI increase in 2021?
According to the latest figures from the Australian Bureau of Statistics, the Consumer Price Index (CPI) climbed 1.3 percent in the December 2021 quarter and 3.5 percent annually (ABS).
In September 2021, what was the Consumer Price Index?
In September 2021, the UK’s inflation rate, as measured by the CPI, was 3.1 percent. The following are the inflation measures for the year ending September 2021: In September 2021 (Index: 112.4), CPIH inflation was 2.9 percent, down from 3.0 percent in August 2021.
Why is inflation in 2021 so high?
As fractured supply chains combined with increased consumer demand for secondhand vehicles and construction materials, 2021 saw the fastest annual price rise since the early 1980s.
What will the inflation rate be in 2022?
According to a Bloomberg survey of experts, the average annual CPI is expected to grow 5.1 percent in 2022, up from 4.7 percent last year.
What is the current rate of inflation?
The US Inflation Rate is the percentage increase in the price of a selected basket of goods and services purchased in the US over a year. The US Federal Reserve uses inflation as one of the indicators to assess the economy’s health. The Federal Reserve has set a target of 2% inflation for the US economy since 2012, and if inflation does not fall within that range, it may adjust monetary policy. During the recession of the early 1980s, inflation was particularly noticeable. Inflation rates reached 14.93 percent, prompting Paul Volcker’s Federal Reserve to adopt drastic measures.
The current rate of inflation in the United States is 7.87 percent, up from 7.48 percent last month and 1.68 percent a year ago.
This is greater than the 3.24 percent long-term average.