Despite rosier figures, America still has an inflation problem

The white house used to dread monthly inflation reports, each one worse than the previous, each another blow to President Joe Biden’s popularity. Now the reports are less fearsome. In the latest release on September 13th, the consumer-price index for August rose by 8.3% year on year. But in month-on-month terms, prices rose just 0.1%. These days Republican strategists are advising their party to tone down criticism of the president’s record on inflation, seeing it as less of a winning argument.

But for economists the newfound optimism is a harder sell. The less fearsome data mainly reflects a steep fall in oil markets. The price of crude is down a quarter from its peak in early June. Looking at a breakdown of the August price data, energy lowered the month-on-month inflation rate by nearly half a percentage point. It was the other components—food, goods and, especially, services such as rent—that pushed up prices (see chart).

Stripping out volatile energy and food prices…

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