Home Business US consumer prices accelerate in August on gasoline

US consumer prices accelerate in August on gasoline


US consumer prices Accelerate in August on gasoline

US consumer prices accelerate in August on gasoline: August had the largest increase in U.S. consumer prices in almost a year due to a spike in gas costs, but underlying inflation may have moderately grown, which may lead the Federal Reserve to decide to maintain interest rates next Wednesday.

According to the Labor Department’s statement on Wednesday, the consumer price index rose by 0.6% in June of 2022, marking the biggest rise since then. The CPI had increased by 0.2% during the previous two months.

August saw a spike in gasoline prices, which peaked in the third week of the month at $3.984 a gallon, according to U.S. Energy Information Administration data. This contrasted with a gallon costing $3.676 in July over the same time frame.

The CPI increased 3.7% in the 12 months ending in August, after a 3.2% increase in July. Although yearly inflation increased for the second consecutive month in June 2022, consumer prices decreased year over year from their high of 9.1%. The Federal Reserve targets 2% inflation.

Reuters surveyed economists, who predicted that the CPI would rise by 0.6% last month and 3.6% annually. A week before to the Federal Reserve’s rate announcement, the report was released, which came after data this month indicated that conditions in the job market had eased in August.

With the volatile food and energy components excluded, the CPI rose by 0.3% despite a decrease in the cost of secondhand vehicles and trucks. Two months in a row, the so-called core CPI had grown by 0.2%. Even while rents have been rising, the trend is slowing, and as new apartment complexes hit the market, additional slowdowns are anticipated.

Through August, the so-called core CPI grew by 4.3% over the previous 12 months. It came after a 4.7% growth in July and was the lowest year-over-year increase since September 2021.

Based on the FedWatch tool from CME Group, financial markets are largely expecting the Fed to hold its policy rate steady next Wednesday. The U.S. central bank increased its benchmark overnight interest rate by 525 basis points to a range of 5.25% to 5.50% since March 2022.

But because services inflation, which does not include housing, is still high, a rate increase in November is still a possibility.

Some economists point to increased insurance rates, particularly for cars, as evidence that they think inflation risks are skewed upward. The Bureau of Labor Statistics of the Labor Department, which publishes the CPI report, recently announced modifications to its methodology for evaluating health insurance prices. As a result, health insurance costs are likely to increase in the report from October through next spring.

If a strike in the auto industry lasts more than a month, supply chains may be disrupted and car prices could rise, according to analysts.

A work stoppage at General Motors (GM.N), Ford Motor (F.N), and Stellantis (STLAM.MI) is authorized if a wage and pension plan deal is not reached before the current four-year contract ends on September 14. This authorization was overwhelmingly approved by United Auto Workers members last month.

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