Inflation in the United States continued to rise in August, with the Consumer Price Index (CPI) increasing by 0.6% on a monthly basis and 3.7% on a yearly basis.[0] This marked an acceleration from July's 0.2% monthly increase and 3.2% annual gain.[0] The CPI is a closely watched measure of inflation that tracks changes in the costs of everyday goods and services.
Gasoline prices were the largest contributor to the increase in August's CPI, accounting for more than half of the jump. Gas prices surged by 10.6% in August, compared to a 0.2% increase in the previous month.[1] Overall energy prices, which also include fuel oil, electricity, and utility gas service, spiked to 5.6% from 0.1%.
Core inflation, which excludes volatile food and energy prices, continued to moderate, rising by 0.3% in August.[2] On an annual basis, core CPI increased by 4.3%, matching economists' estimates.[2] Core inflation is considered a better predictor of future prices and provides insights into underlying price trends.[3]
Food prices also saw an increase, rising by 0.2% from July to August and by 4.3% on a yearly basis.[4] The price of food purchased at grocery stores increased by 3%, while food away from home increased by 6.5%.[5]
The housing market also added to inflationary pressures, with shelter costs rising for the 40th consecutive month.[6] The shelter index increased by 0.3% on a monthly basis and by 7.3% on a yearly basis.[7] Rents were up 7.8% on the year and 0.3% on a monthly basis.[8]
These inflationary pressures have led to speculation about the Federal Reserve's next moves. The central bank has already raised its benchmark interest rate to the highest level in 22 years in an effort to tackle inflation.[9] The Fed's policy-setting committee is set to meet next week to determine whether further rate hikes are necessary.[10]
While many experts expect the Fed to keep interest rates unchanged for now, higher inflation has historically led to higher interest rates.[11] Federal Reserve Chairman Jerome Powell has hinted at additional rate hikes to come.[12] The language used by Powell in the upcoming meeting will likely be a key driver of any market reaction.
Overall, the latest inflation data indicates that the Federal Reserve may need to take further action to combat rising prices. However, the exact course of action remains uncertain and will depend on how inflation continues to evolve in the coming months.
0. “Stock Market News Today, 9/13/23 – Stocks Finish Mixed after August's CPI Print – TipRanks.com” TipRanks, 13 Sep. 2023, https://www.tipranks.com/news/stock-market-news-today-9-13-23-futures-rise-ahead-of-august-cpi-print
1. “U.S. inflation accelerates to 3.7% in August amid jump in gas prices By Investing.com” Investing.com, 13 Sep. 2023, https://www.investing.com/news/economic-indicators/us-inflation-accelerates-to-37-in-august-amid-jump-in-gas-prices-3173605
2. “Stock Market Today: Markets Close Mixed on Inflation Data” Kiplinger's Personal Finance, 13 Sep. 2023, https://www.kiplinger.com/investing/stocks/stock-market-today-markets-closed-mixed-on-inflation-data
3. “Inflation news good or bad? NC State economist says both – here’s why” WRAL TechWire, 13 Sep. 2023, https://wraltechwire.com/2023/09/13/inflation-news-good-or-bad-nc-state-economist-says-both-heres-why/
4. “Bay Area inflation rate cools off as price gains approach normal pace” The Mercury News, 13 Sep. 2023, https://www.mercurynews.com/2023/09/13/bay-area-inflation-consumer-price-food-electric-gas-economy-august
5. “US experiences biggest jump in inflation in over a year” ABC 10 News San Diego KGTV, 13 Sep. 2023, https://www.10news.com/us-experiences-biggest-jump-in-inflation-in-over-a-year
6. “Consumer price index rises 3.7% Y/Y in August, fueled by gasoline, housing prices” Seeking Alpha, 13 Sep. 2023, https://seekingalpha.com/news/4011309-consumer-price-index-rises-37-yy-in-august-slightly-outpacing-consensus
7. “US inflation climbs more than expected in August as gas prices surge” New York Post , 13 Sep. 2023, https://nypost.com/2023/09/13/us-inflation-climbs-3-7-in-august-as-fed-mulls-more-hikes
8. “What to know about the August inflation spike” The Hill, 13 Sep. 2023, https://thehill.com/business/4202759-what-to-know-about-the-august-inflation-spike/
9. “August core inflation, excluding food and energy, rose 0.3%, hotter than expected” CNBC, 13 Sep. 2023, https://www.cnbc.com/2023/09/13/cpi-inflation-report-august-2023-.html
10. “Inflation Ticks Up To 3.7%—Biggest Monthly Jump Since January” Forbes, 13 Sep. 2023, https://www.forbes.com/sites/dereksaul/2023/09/13/inflation-ticks-up-to-37-biggest-monthly-jump-since-january/
11. “August CPI Forecast to Show More Good News on Inflation, Higher Gas Prices Aside” Morningstar, 11 Sep. 2023, https://www.morningstar.com/markets/august-cpi-forecast-show-more-good-news-inflation-higher-gas-prices-aside
12. “What the new inflation report means for mortgages (and what to do about it)” CBS News, 13 Sep. 2023, https://www.cbsnews.com/news/what-new-inflation-report-means-for-mortgages-and-what-to-do/
