Atlanta area inflation: Consumer prices continue to rise, but at a slower rate in August

 

Consumer prices in the Atlanta metro area advanced 1.1 percent in the two months ending in August 2021, according to new information released by the U.S. Bureau of Labor Statistics for the Consumer Price Index for All Urban Consumers (CPI-U) for the Atlanta-Sandy Springs-Roswell, Ga., metropolitan area.

The two-month rise in prices was less than the two-month increases recorded earlier in the year for the February, April, and June periods. The CPI-U for the Atlanta area is published bi-monthly.

Food prices rose 0.6 percent over the two-month period ending in August, while energy prices increased 1.5 percent. Excluding food and energy, the index for all other items rose by 1.1 percent.

For the 12 months ending in August 2021, consumer prices in the Atlanta-Sandy Springs-Roswell, Ga., area rose by 6.6 percent, slightly less than the 12-month increase recorded in June.

Food prices increased 1.3 percent over the year and energy prices moved up by 26 percent. Excluding food and energy, the index for all other items rose by 5.8 percent for the 12 months ending in August, the same as the 12- month percentage increase recorded in June.

12-month inflation rates for selected items

Gasoline costs rose 51.7 percent in the 12 months ending in August 2021, compared to a 22.6 percent drop recorded in the previous 12-month period. The higher gasoline costs along with a 30.9 percent increase in the cost of used cars and trucks contributed to a 19.9 percent rise in the transportation index.

Costs for shelter, which includes both rent of primary residence as well as the owners’ equivalent rent of residences, increased 5.8 percent over the year.

Atlanta compared to United States

For the two months ending in August, consumer prices in the Atlanta area rose faster than the nation, with the U.S. index increasing by 0.7 percent compared to the 1.1 percent reported for the Atlanta metro area.

Food prices nationwide rose 1.1 percent over two months, while energy prices increased 2.5 percent. Excluding food and energy, the index for all other items moved up by 0.5 percent.

Over the past 12 months, the index for all items for the United States increased 5.3 percent, while consumer prices in the Atlanta area moved up by 6.6 percent.

Looking at the CPI over 24 months 

Disruption to consumers and businesses due to Covid-19 restrictions and shutdowns in 2020 resulted in consumers cutting back on some purchases while shifting expenditures for other purchases. 

Nationally, average annual expenditures for all consumer units in 2020 were $61,334, a 2.7-percent decrease from 2019, and the U. S Bureau of Labor Statistics reported that nine of the 14 major components of household spending decreased during 2020. 

As a result, there is some value in looking at consumer prices over a 24-month period in addition to the normal over-the-year report. 

Over the 24-month period from August 2019 to August 2021, consumer prices in the Atlanta metro area averaged 3.7 percent over each of the past two years, while nationally consumer prices averaged 3.3 per cent per year. 

Using the 3.7 percent average over each of the past two Augusts, consumer prices in the Atlanta area are at their highest 12-month level for an August period since August 2011, when the 12-month increase was 3.8 percent.

Atlanta inflation rate increases but not yet above trendline

The Consumer Price Index for All Urban Consumers in Atlanta-Sandy Springs-Roswell, Ga., increased 1.6 percent from February to April, the U.S. Bureau of Labor Statistics reported today. The index for food declined 0.2 percent, while the energy index increased 6.6 percent. The index for all items less food and energy rose 1.6 percent from February to April.

For the 12 months ending in April, the CPI-U for All Items increased 6.0 percent. The index for food declined 0.2 percent over the past 12 months, while the energy index rose 30.0 percent. The index for all items less food and energy increased 5.0 percent.

Considering inflation rates over a 24-month period

While the most recent 12-month increases appear to be large, they come a year after the economy suffered a sharp setback as consumers changed their buying habits and companies saw drop-offs in their business. These resulted in some significant slowdowns in the rate of increase for some inflation measures, while other indexes actually declined over the year. For example, the CPI-U for All Urban Consumers in Atlanta-Sandy Springs-Roswell, Ga., declined 0.3 percent from April 2019 to April 2020.

Because of the sharp slowdown in the economy in 2020, there is good reason to consider inflation not over the past 12 months, but over the past 24 months. In that context, the current inflation rate is in line with inflation in some prior years.

From April 2019 to April 2021, the Consumer Price Index for All Urban Consumers in Atlanta-Sandy Springs-Roswell, Ga., increased 5.6 percent compared to inflation rates of 5.4 percent from 2017 to 2019 and 5.2 percent from 2015 to 2017.

The index for all items less food and energy increased 6.2 percent from 2019 to 2021 compared to inflation rates of 5.1 percent from 2017 to 2019 and 6.9 percent from 2015 to 2017.

Conclusion

While the percentage change over the most recent 12 months may seem to imply higher rates of inflation in the future, once the impact of lower price inflation in 2020 is taken into account, the inflation rates over the most recent 24 months seem in line with past experiences as the economy recovered from the 2007-2009 recession.

Economists will have to wait until later in 2020 to see if retail prices continue to increase at the current rate, accelerate, or actually moderate as the economy recovers from the 2020 downturn.