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(KNSI) – Tuesday’s Consumer Price Index report for August came in higher than expectations.

The headline number increased by 0.1% from the month prior. If you strip out volatile costs like energy, the core number jumped by 0.6%. The yearly figures rose by 8.3% and 6.3%, respectively.

Food inflation continues to surge but College of Saint Benedict and Saint John’s University Professor of Economics Louis Johnston says there may be some good news on that front.

“According to the USDA, more farmers are either double cropping — that is they are planning on planting another crop as soon as they harvest this one. So that’s going to expand supply. The other is there’s a move to more marginal lands so areas that haven’t had crops planted on them are actually getting some crops planted on them.”

Food inflation is a significant hardship on consumers because it affects necessities and it is one area where tighter monetary policy from the Federal Reserve doesn’t translate into stable prices quickly.

Another thing to watch for is how long the inflation rate is at elevated levels. Johnston says the health care turmoil in this state could provide a clue.

“So, the nurses strike is to me a bellwether of what’s going to be happening because people now realize that 2-3% wage increases mean that your real purchasing power is probably going down somewhere between three and five percent. And so they’re going to start asking for more. The question is, whether they’re going to get it.”

Johnston says the Federal Reserve is trying to create slack in the labor market by slowing down the economy, which will cause workers to throttle back salary demands. If wages rise too quickly, the extra money will chase after products causing prices to react.

Although Tuesday’s data was “hot,” meaning above expectations, Johnston says surprises in the data now, in either direction, are not expected to have major political consequences for the midterm election.

“From what I can tell, a lot of people…their view of what inflation is is based on where it was back in March or April. They’re not absorbing or acting on as much information as they’re getting now.”

Food, rent, and healthcare jumped the most in August, while gasoline prices dropped by about 10 percent. The United States released 8.4 million barrels of oil from the Strategic Petroleum Reserve last week alone to help bring down costs at the pump. The policy will be ending in October.

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