Food prices climb higher into the double-digits, driving up inflation more than expected

In August, the price of food rose 0.8% over July – the smallest increase since last December, but year-over-year the 11.4% increase was the largest jump since May 1979, according to the Consumer Price Index updated Sept. 13.

Unlike previous months, the price for food at home rose slower than that of food consumed at home and all food – rising 0.7% in August from the previous month after a 1.3% increase in July and a 1% increase in June. The month-over-month increase for food consumed away from home was 0.9% in August, up from a 0.7% the previous month.

The stubborn increase in food prices, combined with higher shelter and medical care service costs – up 0.7% and 0.8% in August over the previous month and 6.2% and 5.8% year-over-year, respectively – offset a dramatic drop in energy and gas prices, which fell 10.1% and 10.6% in August, respectively.

Combined, these increases drove up overall inflation more than expected, much to the chagrin of policymakers and investors

In August, inflation for all items inched up 0.1% for the month and 8.3% for the year – a disappointing revelation that suggests efforts by the Federal Reserve to stem rising costs are not as effective as they intended and more drastic action may be necessary.

The Federal Reserve is expected to raise interest rates another three-quarters of a point when they meet next week, which would the third time it takes what was previously an unprecedented action, in an effort to further cool the economy.

The FED isn’t alone in its approach to fighting inflation, according to Craig Turner, senior commodities broker with StoneX Financial Inc, Daniels Trading Division.

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