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For the better part of a year, the inflation narrative among many economists and policymakers was that it was essentially a food and fuel problem. Once supply chains eased and gas prices abated, the thinking went, that would help lower food costs and in turn ease price pressures across the economy.

August’s consumer price index numbers, however, tested that narrative severely, with broadening increases indicating now that inflation could be more persistent and entrenched than previously thought.

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CPI excluding food and energy prices — so-called core inflation — rose 0.6% for the month, double the Dow Jones estimate, bringing year-over-year cost-of-living increases up 6.3%. Including food and energy, the index rose 0.1% monthly and a robust 8.3% on a 12-month basis.

At least as important, the source of the increase wasn’t gasoline, which tumbled 10.6% for the month. While the summertime decline in energy prices has helped temper headline inflation numbers, it hasn’t been able to squelch fears that inflation will remain a problem for some time.

Rather than fuel, it was food, shelter and medical services that drove costs higher in August, slapping a costly tax on those least able to afford it and raising important questions about where inflation goes from here.

“The core inflation numbers were hot across the board. The breadth of the strong price increases, from new vehicles to medical care services to rent growth, everything was up strongly,” said Mark Zandi, chief economist at Moody’s Analytics. “That was the most disconcerting aspect of the report.”

Indeed, new vehicle prices and medical care services both increased 0.8% for the month. Shelter costs, which include rents and various other housing-related expenses, make up nearly a third of the CPI weighting and climbed 0.7% for the month.

Food costs also have been nettlesome.

The food at home index, a good proxy for grocery prices, has increased 13.5% over the past year, the largest such rise since March 1979. Prices continued their meteoric climb for items such as eggs and bread, further straining household budgets.

For medical care services, the monthly increase of 0.8% is the fastest monthly gain since October 2019. Veterinary costs rose 0.9% on the month and were up 10% over the past year.

“Even things like apparel prices, which often decline, were up a little bit [0.2%]. My view is that with these lower oil prices, they stick and assuming they don’t go back up, that will see a broad moderation of inflation,” Zandi said. “I have not changed my forecast for inflation to get back to [the Federal Reserve’s 2% target] by early 2024, but I’d say I hold that forecast with less conviction.”

On the positive side, prices came down again for things such as airline tickets, coffee and fruit. A survey released earlier this week by the New York Fed showed consumers are growing less fearful about inflation, though they still expect the rate to be 5.7% a year from now. There also are signs that supply chain pressures are easing, which should be at least disinflationary.

But about three-quarters of the CPI remained above 4% in year-over-year inflation, reflecting a longer-term trend that has refuted the idea of “transitory” inflation that the White House and the Fed had been pushing.

And energy prices staying low is no given.

The U.S. and other G-7 nations say they intend to slap price controls on Russian oil exports starting Dec. 5, possibly inviting retaliation that could see late-year price increases.

“Should Moscow cut off all natural gas and oil exports to the European Union, United States and United Kingdom, then it is highly probable that oil prices will retest the highs set in June and cause the average price of regular gas to move well back above the current $3.70 per gallon,” said Joseph Brusuelas, chief economist at RSM.

Brusuelas added that even with housing in a slump and possible recession, he thinks price drops there probably won’t feed through, as housing has “a good year or so to go before the data in that critical ecosystem improves.”

With so much inflation still in the pipeline, the big economic question is how far the Fed will go with interest rate increases. Markets are betting the central bank raises benchmark rates by at least 0.75 percentage point next week, which would take the fed funds rate to its highest level since early 2007.

“Two percent represents price stability. It’s their goal. But how do they get there without breaking something,” said Quincy Krosby, chief equity strategist at LPL Financial. “The Fed isn’t finished. The path to 2% is going to be difficult. Overall, we should start to see inflation continue to inch lower. But at what point do they stop?”

Lower gas prices are raising optimism that inflation is on the decline, according to a survey Monday from the New York Federal Reserve.

Respondents to the central bank’s August Survey of Consumer Expectations indicated they expect the annual inflation rate to be 5.7% a year from now. That’s a decline from 6.2% in July and the lowest level since October 2021.

Three-year inflation expectations dropped to 2.8% in August from 3.2% the previous month. That was tied for the lowest level for that measure since November 2020.

The lowered outlook came amid a tumble in gasoline prices from more than $5 a gallon earlier in the summer, a nominal record high. The current national average is about $3.71 a gallon, still well above the price from a year ago, but about a 26-cent decline from the same point in August, according to AAA.

Along those lines, consumers now expect gas prices to be little changed a year from now, according to the Fed survey. Food prices are expected to continue to climb, but the 5.8% anticipated increase a year from now is 0.8 percentage point lower than it was in July.

Rents are projected to increase 9.6%, but that is a 0.3 percentage point drop from the July survey.

Those numbers come as the Fed is using a series of aggressive interest rate hikes to battle inflation that is still running close to a more than 40-year high. The central bank is widely expected to approve a third consecutive 0.75 percentage point increase when it meets again next week.

While consumers expect inflation pressures to ease somewhat, they still think the cost of living will escalate.

Median expectations for household spending over the next year rose 1 percentage point to 7.8% in August, an increase in outlook driven largely by those holding a high school education or less and a group largely composed of lower earners.

Moreover, respondents said credit is harder to come by now. Those reporting that it’s more difficult now to get credit rose to a series high, with 57.8% saying that it’s either harder or much harder, the New York Fed reported.

Also, those expecting to miss a minimum debt payment over the next three months rose 12.2%, a 1.4 percentage point gain that was the highest reading since May 2020.

The Bureau of Labor Statistics on Tuesday will release the August consumer price index reading. Economists surveyed by Dow Jones expect CPI to have risen 8% from a year ago, though they see a decline of 0.1% from July. Excluding food and energy, core CPI is projected to rise 6% year over year and 0.3% month over month.