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Inflation rose 3.7% for the 12-month period ending in August, largely because of last month’s spike in gasoline prices and the continued steady increase in shelter costs, according to the latest Consumer Price Index report released Wednesday by the U.S. Bureau of Labor Statistics. 

Gasoline prices increased 10.6% in August, compared to a modest 0.2% monthly increase in July. The average cost of a gallon of gasoline nationally was $3.84 per gallon in August, according to the U.S. Energy Information Administration. In June, the average cost was $3.57. 

Despite the jump in gasoline prices caused by recent cutbacks in overseas oil production, the cost of gasoline was still 3.3% lower in August of 2023 than a year ago in August of 2022. 

Viewed on a monthly basis, the food index rose 0.2% in August, just as it did in July. Other indexes which increased in August included rent (+0.5%), motor vehicle insurance (+2.4%), airline fares (+4.9%), apparel (+0.2%) and new cars (+0.3%). The index for used cars and trucks declined (-1.2%) for the month. 

Compared to a year ago, residential rents have increased 7.8%. Food prices are up 4.3% during the same 12-month period. New vehicle prices are up 2.9% and used vehicle prices have dropped 6.6% compared to August of 2022. Motor vehicle insurance is up 19.1% over 12 months and airline fares are down 13.3%. 

Because food and energy prices tend to fluctuate more, the less volatile all-items-less-food-and-energy index is closely watched by economists. This so-called core index rose 4.3% for the 12-month period that ended in August, even faster than the overall index that rose 3.7%. 

The Federal Reserve Board, which has set a 2% target goal for inflation, has previously signaled that it would not raise benchmark interest rates at its next meeting Sept. 19-20.  However, it is unclear if the latest inflation report will prompt the Fed to raise interest rates one more time before the end of 2023.