The Bureau of Labor Statistics said that consumer prices rose 0.1 percent in August, its slowest pace since May. After seeing gasoline prices go up earlier in the summer (up 6.3 percent and 1.0 percent in June and July, respectively), they stabilized in the month of August, down 0.1 percent. Overall energy costs for consumers declined 0.3 percent for the month, with lower electricity (down 0.7 percent) and piped-in natural gas (down 0.1 percent) costs helping to ease Americans’ home budgets.

The good news is that energy costs, in general, have risen very modestly, up just 0.2 percent year-to-date and actually down 0.1 percent year-over-year. This has helped to keep overall inflation mostly in-check. Food prices have also increased somewhat reasonably over the past 12 months, up 1.4 percent. In August, food costs were up 0.1 percent, with the largest gains seen for fruits, vegetables, meats, eggs, and dairy products.

Outside of food and energy, components with the greatest monthly price increases included alcoholic beverages, lodging away from home, medical care services, personal care, rent for one’s primary residence, and tobacco and smoking products.

Overall, consumer prices have risen 1.5 percent over the last 12 months, decelerating a bit from the 2.0 percent rate observed last month. Excluding food and energy, core inflation is currently 1.8 percent, edging up a tad from 1.7 percent the month before.

This suggests that inflation remains quite modest, with core inflation below the Federal Reserve’s stated target of 2 percent. Indeed, core inflation has not exceeded 2 percent since July 2012. A similar finding was noted in last week’s producer price index report. With the Federal Open Market Committee meeting starting today and a decision on monetary policy coming tomorrow, this news should allow the Federal Reserve to continue to pursue “highly accommodative” policies, even as it seeks to “taper” (or slow) its asset purchases.

Chad Moutray is the chief economist, National Association of Manufacturers.

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