The US experienced a higher-than-anticipated inflation rate in August, presenting a challenge for the Federal Reserve as they prepare for the upcoming policy meeting.
The Bureau of Labor Statistics indicated that consumer prices surged 3.7% year-on-year, a rise from July’s 3.2% and surpassing the predicted 3.6%. Prices rose by 0.6% on a month-to-month basis.
Gasoline prices accounted for over half of this monthly hike.
When excluding the unpredictable costs of food and energy, core inflation marginally exceeded expectations, with a 0.3% increase month-on-month (projected at 0.2%). This positions the annual rate at 4.3%, consistent with predictions, but down from 4.7% in July.
Andrew Hunter, the deputy chief US economist at Capital Economics, believes the Federal Reserve may disregard August’s 0.6% monthly surge in the headline CPI, attributing it to the recent spike in energy costs.
He notes, “Even though the core prices saw a modest rise of 0.3% month-to-month, the data doesn’t strongly suggest that the Fed should consider increasing interest rates.”
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