Analysts Differ On Implication Of Inflation Data --- Many Say Faster 0.5% Rise In Consumer Price Index For August Shows Trend
WASHINGTON -- The slight acceleration in August consumer prices sparked considerable disagreement among economists about the outlook for inflation.</br></br>Many analysts said the 0.5% rise in prices last month signaled the start of a modest pickup in inflation, perhaps to as much as a 6% annual rate, that will continue at least through year-end. But others said the increase will be followed by smaller price rises in coming months.</br></br>The August increase, which equaled 5.5% at a compounded annual rate, followed a July rise of 0.3%, or 3.5% at a compounded annual rate, the Labor Department reported Friday. The August rise was the largest since a 0.5% increase in April.</br></br>Fruit and vegetable prices, which surged 3.3% last month, accounted for much of the overall price increase. Apparel prices also rose sharply, and gasoline prices declined less than in July. All figures are seasonally adjusted.</br></br>"I'm afraid this is the beginning of higher inflation," said Donald Ratajczak, director of the economic forecasting project at Georgia State University. "August wasn't an aberration." He expects inflation to run at a 5.5%-to-6% pace for the rest of the year, reflecting rising prices of energy and other commodities.