Fed Faces Inflation Report Amid Soaring Oil Prices and Interest Rates
The US inflation report is set to be released on Friday, amidst rising oil prices and interest rates. The Federal Reserve is considering whether to hike its short-term interest rate next week, with some officials saying the report could swing them either way.
Oil and gas prices have spiked again due to renewed combat in the Middle East, with the nationwide average cost of a gallon of gas jumping 7% from last month to $4.28. This has pushed up energy costs, which are expected to spread through more of the economy.
According to data provider FactSet, headline inflation is projected to have ticked down to 3.3% in August, but still above the Fed's 2% target. On a monthly basis, prices are forecast to have risen 0.4% from July to August, which would keep inflation far above 2% if it continues.
Kathy Bostjancic, chief economist at Nationwide, warned that this could be a prolonged disruption: 'This is not one and done.'