US inflation tops forecasts in August
By Michele Maatouk
Date: Tuesday 13 Sep 2022
(Sharecast News) - US consumer price inflation slowed in August but was still above expectations, according to data released on Tuesday by the Labor Department, fuelling expectations of another big rate hike from the Federal Reserve.
Inflation eased to 8.3% on the year from 8.5% in July, but came in above expectations of 8.1%. On a monthly basis, consumer price inflation rose 0.1%, compared to a flat reading in July.
Meanwhile, core inflation - which strips out food and energy - increased to 6.3% in August from 5.9% a month earlier.
The food index rose by 11.4% on the year, marking the biggest 12-month increase since May 1979.
Neil Wilson, chief market analyst at Markets.com, said the hotter-than-expected inflation number is being seen as a signal that "the Fed is nowhere near done raising rates".
"75 basis points next week is nailed on now and markets now see a 20% chance of a 100bps move. And this inflation number - having failed to live up to hopes it would show a real sign of cooling in inflation pressures as energy was sharply down, points to more prolonged hiking cycle and for the Fed to need to go higher - Apr 2023 now priced for 4.2%...curve still inverted still shows markets think the Fed will eventually snap.
"Markets are saying the Fed will get its recession but it's not able to adjust to the fact that rates will need to stay higher for longer."
Paul Ashworth, chief US economist at Capital Economics, said the strength of core inflation confirms the Fed will hike by at least 75bps.
"There might be some late speculation that the Fed could even go for a 100bp hike although, with rates now close to neutral, we doubt that will happen.
"That outsized monthly gain in underlying prices, which took the annual core inflation rate up to a new cyclical high of 6.3%, from 5.9%, is somewhat hard to square with all the other evidence pointing to signs of prices falling back in several key components. In short, we can see disinflation everywhere except in the official CPI statistics."
Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange
Market.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN