August Inflation Surge Sets Stage for US Rate Hike
US inflation accelerated in August, rising faster than the previous month and increasing pressure on the Federal Reserve to raise interest rates. The Labor Department report showed that consumer prices rose 0.4% in August after increasing 0.1% in July.
The core inflation measure posted its biggest increase in four months, with prices excluding volatile food and energy rising 0.3%. This was the largest monthly increase since April.
Financial markets initially assessed the probability of a 0.25 percentage-point rate hike at the Federal Reserve's meeting next week at 91%, but this figure later fell to 87%.
Economists believe that more persistent inflation, together with signs of a recovering labor market in August, could prompt Federal Reserve officials to raise borrowing costs not only next Wednesday but possibly again in October or December.