Inflation Slows, But Philly Area Residents Pay The Price Elsewhere

PENNSYLVANIA — Lower gas prices in Pennsylvania, along with cheaper used cars, slowed inflation for a second straight month in August, but the new inflation report released Tuesday painted far from a rosy picture as many other items increased in price.

Consumer prices surged 8.3 percent last month compared with August 2021, down from the 8.5 percent year-over-year increase in July. Inflation is still painfully high as food and energy prices remain volatile, but it’s down from the four-decade high of 9.1 percent in June.

In Pennsylvania, residents are paying an average of $3.90 a gallon, according to the AAA fuel price tracker. That's down from $4.29 a month ago, but up from $3.30 this time a year ago.

Nationwide, gas averaged $3.71 Tuesday, compared with $3.80 a gallon a week ago, $3.97 a gallon a month ago and $3.18 a gallon a year ago.

Used vehicle prices are declining but still remain about 7.8 percent higher than at this time last year. Airfares are declining as well, down -8.8 percent from July, though they remain 33.4 percent higher than a year ago.

In the greater Philadelphia metropolitan area, prices have not changed in the past two months.

"Regional Commissioner Alexandra Hall Bovee noted that this is the first release since December 2020 without a bimonthly increase," the U.S. Bureau of Labor Statistics noted in their latest release.

Slowing inflation in those sectors aside, many residents in the Philly area continue to struggle.

What's kept prices steady is a 9.2 percent decline in the energy index. But the food price index has increased by 2.1 percent, and all other items taken together have increased 0.7 percent.

Specifically, alcoholic beverages have seen a sharp rise, going up 7.5 percent since June. Cereals are up 4.4 percent, and meats, poultry, fish, and eggs are up 3.6 percent.

School tuition costs have gone up 2.2 percent in that same time frame, while shelter costs, including rent, have gone up 0.7 percent.

Nationally, grocery prices are about 11.4 percent higher in the 12-month period ending Aug. 30, and electricity and natural gas together are 19.8 percent higher. Monthly rent costs are about 6.7 percent higher than a year ago.

Medical costs also increased 0.8 percent from July, for a year-over-year increase of 5.6 percent. Other increases in August were seen in the costs of home furnishings, household operations, new vehicles and insurance, and education.

Excluding the food and energy categories, so-called core prices jumped 0.6 percent from July to August, higher than many economists had expected and a sign of the persistence of inflation, which remains far higher than many Americans have ever experienced.

The Federal Reserve is expected to announce another big interest rate hike at its September meeting next week to tame inflation, Reuters reported. The contemplated 75-basis-point interest hike would be the third this year.

Inflation is a central issue in the Nov. 8 midterm elections. Economists generally agree with Republicans who blame President Joe Biden’s $1.9 trillion stimulus package for the inflation surge, but also point out snarled supply chains, the war in Ukraine and widespread shortages of semiconductors have also contributed.

Inflation is losing some of its steam as a midterm issue. It dropped to the No. 2 national issue, behind threats to democracy, in a poll by NBC News last month.

The supply chain disruptions of the pandemic appear to be easing, too. General Motors has said overseas production of semiconductors has resumed to about 80 percent of pre-pandemic levels, putting auto manufacturing back on track.

Executives at Kroger, the nation’s largest grocery chain, said flailing prices for farm commodities such as wheat and corn is expected to slow the double-digit increases Americans have seen in the prices of meat, milk, and fruits and vegetables.

The Associated Press contributed reporting.