Posted originally on Sep 12, 2025 by Martin Armstrong | 

Consumer prices are up 2.9% in August on an annual basis after rising 2.7% in July. CPI doubled from July’s reading at 0.4%, with inflation now sitting at 2.9%. Core CPI excluding food and energy rose 3.1% YoY.

Food prices are 3.2% higher this year, rising 0.5% from July 2025. Food at home rose 3.2% YoY (0.6% MoM), while food away from home rose 3.3% YoY (0.3% MoM). Vegetable prices rose 1.6% from the month prior. Meats, fish, poultry, and eggs rose 1% in August, with beef prices continuing to rise at 2.7%. Dairy products increased slightly by 0.1% and nonalcoholic beverages rose 0.6%.

There was an uptick in the price of medical care services with a 4.2% annual increase. The medical care index overall decreased by 0.7%.

Shelter costs spiked 3.6% in the past year as well, with household goods and furnishings rising 3.9%.

The tariff price adjustment can be felt in the auto sector as prices are up across the board. Even used cars have increased 6% in price from August 2024, and motor vehicle insurance is up 4.7% over the same timeframe. Transportation services in general rose 3.5%. Airline fares are up 5.9% on a monthly basis after rising 4% in July.

The energy index rose 0.2% over the past 12 months, although there seems to be a bit of reprieve on gas (down 6.6% YoY), and general energy commodities (-6.2% YoY). The cost of electricity spiked 6.2% in the past 12 months, energy services rose 7.7%, and utilities are up an alarming 13.8%.

Inflation continues to rise faster than wages, with the average urban wage earner seeing a 2.8% annual increase in pay. The Labor Department noted in a separate report that weekly unemployment reached 263,000 on a seasonally adjusted basis, with 27,000 additional job losses from the prior period.

Prices are up, employment is down, and overall GDP is declining. The mainstream analysts are finally recognizing that we are in a period of stagflation.

Our computer is demonstrating that volatility in unemployment will rise from 2026, peaking first in 2028 with a Panic Cycle in 2029. This also confirms our War Cycles for 2026. What we MUST come to grips with is that there is far more to understanding the economy from a single statistic perspective. However, we are also undergoing two significant factors that the classic economic models fail to incorporate, aside from the fact that 99% of the rhetoric and the economic models overlook the leverage in the banking system that creates money outside of the Federal Reserve through lending.