Inflation Remains Sticky as ECB Rate Hike Pressures Fed Decision

A key interest rate hike by the Federal Reserve (Fed) is now fully anticipated, according to market expectations. The Labor Department reported that the Consumer Price Index (CPI) rose 0.4% in August, meeting economists' consensus forecasts.

The core CPI, excluding food and energy, increased 0.3%, exceeding economists' forecast of a 0.2% rise. However, shelter costs rose only 0.3% in August, which was disappointing compared to the previous month's increase.

The Producer Price Index (PPI) also rose 0.4% in August, as expected. The good news is that core PPI, excluding food and energy, increased only 0.2%, below economists' forecast of a 0.3% rise. However, wholesale goods prices surged 1.1%, while wholesale service costs rose only 0.1%.

The European Central Bank (ECB) raised its key interest rates by 0.25% on Thursday, putting pressure on the Fed to follow suit. Big central banks tend to move in tandem, and this ECB rate hike is likely to influence the Fed's decision.