Inflation in August had its biggest monthly increase of the year, with consumers facing higher prices, especially in energy. The consumer price index (CPI) rose 0.6% for the month and 3.7% annually, as announced by the US Department of Labor. Despite expectations, when food and energy are disregarded, the core CPI increased by 0.3% monthly and 4.3% annually.
Energy stood out in the increase, with prices growing 5.6%, including a 10.6% increase in gasoline. Furthermore, housing costs, which represent around a third of the CPI weight, grew by 0.3%.
In the cores, the housing, vehicle insurance and education sectors are in the group that saw the biggest price acceleration, while used cars and trucks were the only ones that slowed down in August.
Inflation impacted wages, reducing real average hourly earnings by 0.5% monthly. At the same time, Federal Reserve authorities are evaluating long-term strategies to address the inflation problem, after consecutive increases since March 2022. Recent comments suggest a more cautious approach from the institution.
Andrew Hunter, from Capital Economics, opined that the data should not change the Fed’s immediate plans. The market expectation is that the Fed will maintain rates at the next meeting, but uncertainty reigns regarding future decisions.
After the release of the CPI, the yields of U.S. government bonds accelerated their rise, but soon cooled down. At 09:17 AM, the rate of the ten-year Treasuries was at 4.29%.