US consumer inflation ticks up in August on gasoline prices

US consumer inflation ticks up in August on gasoline prices

Gasoline prices bumped up the US inflation reading in August, ahead of policymakers' key interest rate decision
Gasoline prices bumped up the US inflation reading in August, ahead of policymakers' key interest rate decision. Photo: MARIO TAMA / GETTY IMAGES NORTH AMERICA/Getty Images via AFP/File
Source: AFP

PAY ATTENTION: Follow our WhatsApp channel to never miss out on the news that matters to you!

Consumer inflation in the United States picked up in August for a second straight month, according to government data released Wednesday, putting the heat on policymakers as they work to lower prices.

The consumer price index (CPI), a key inflation gauge, jumped 3.7 percent from a year ago, picking up pace from July's 3.2 percent figure, said the Labor Department. But a measurement stripping out volatile segments cooled.

All eyes are on the report, which is expected to have a bearing on the US central bank's interest rate decision released next week.

The Federal Reserve has lifted the benchmark lending rate rapidly since March last year to tamp down demand and sustainably lower inflation -- but the current figure remains stubbornly above officials' two percent goal.

In August, higher gasoline costs bumped up headline inflation but the "core" reading -- removing the volatile food and energy components – cooled to 4.3 percent on an annual basis.

Read also

Asian markets swing as crude spike stokes inflation concerns

"The index for gasoline was the largest contributor to the monthly all items increase, accounting for over half of the increase," said the Labor Department.

PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!

The department added that the shelter index, which takes into account rent, continued advancing -- rising for a 40th consecutive month.

Between July and August, CPI rose 0.6 percent, accelerating from the prior month too.

While the latest report could give the Fed some pause, analysts expect it may not translate to further rate hikes.

If "core" readings continue to weaken, "that will be taken as a sign by the Fed that perhaps further tightening is not necessary," said Gregory Daco, EY chief economist.

'Cautious'

"The paradigm for Fed policymakers has shifted away from tighten at all costs to tighten only as certain conditions are being met," Daco said.

Read also

Most Asian markets drop as uneasy traders await key data

These conditions include whether or not domestic demand is stronger than expected and whether the labor market is still hotter-than-hoped.

The Fed is likely to be more focused on underlying inflation when it comes to formulating monetary policy, said economist Nancy Vanden Houten of Oxford Economics.

"We think they’re going to be quite cautious about lowering rates," she told AFP.

"We think that they're done raising interest rates. We think the risk remains for more rate increases, but we certainly don't expect one next week," she added.

Most recently, the central bank raised rates to the highest level in 22 years.

"The next move from the Fed will be a cut in rates but we don't expect that to happen until the middle of next year," Vanden Houten said.

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.