Nationally, the CPI increased 3.8 percent, year-over-year, and was driven by increases in food and transportion costs, according to the BLS release:
The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.4 percent in August on a seasonally adjusted basis, the U.S. Bureau
of Labor Statistics reported today. Over the last 12 months, the all
items index increased 3.8 percent before seasonal adjustment.
The seasonally adjusted increase in the all items index was broad-
based, with continuing increases in the indexes for gasoline, food,
shelter, and apparel. The gasoline index rose for the 12th time in
the last 14 months and led to a 1.2 percent increase in the energy
index, while the food index rose 0.5 percent, its largest increase
In the first graph, which shows CPI change in the West region, we can see that the CPI growth in August 2011 is now roughly the fourth-highest increase observed for August during the past ten years. 2005, 2006 and 2008 showed larger increases, and price increases in those years were partially countered by strong growth in employment and incomes, but at the present time, income growth has been flat in recent years, as discussed here.
In the West region, as well as nationally, price increases are being largely driven by transportation costs, which increased by 8.0 percent, year over year. Food costs also increased significantly, rising 4.1 percent. Price increases in housing have begun to inch up with July's year-over-year increase at 1.4 percent. Housing costs to consumers will likely move upward as rent increases in the face of increasing demand and little new construction.
Recent price increases will impact household calculations and attitudes on spending as many households conclude that discretionary spending will need to be scaled back in the face of increasing food and transportation costs. These price increases come in the face of continued lackluster performance in the labor markets.
The second graph shows year-over-year changes in CPI for all months since 2002. August's CPI showed the third-largest month-over-month increase reported since October 2008.