US Inflation Surges Amid Energy Price Volatility
The latest US inflation data has presented the Federal Reserve with a mixed signal ahead of its upcoming interest-rate decision, scheduled for this Wednesday. According to Coin Bureau, citing Axios, markets are now pricing in a 90% chance of a rate hike.
Annual core inflation cooled to 2.4%, but monthly price pressures accelerated, with headline consumer prices increasing by 0.4%. Core prices rose by 0.3%, up from 0.2% previously.
The August data showed that energy was a major contributor to the acceleration, with gasoline prices jumping 3.9%. Shelter, airfares, and vehicles also recorded increases. Axios reported that gasoline accounted for more than a third of the monthly headline increase.
Energy prices have become significantly more volatile, with oil prices moving around $100 a barrel, and the national average price of diesel reaching over $6 per gallon for the first time. This creates a difficult environment for policymakers, who need to determine whether higher fuel and transportation costs will filter into broader goods and services.