According to the latest data from the Bureau of Labor Statistics, the reports revealed the rise in US inflation in August. Inflation caused a rise in the Consumer Price Index (CPI) increased by 2.5% in August compared to July’s 2.9% in prices since early 2021.
As a result, the price index rose 0.2% in August and July this year. However, this inflation weakened the labor market by the end of the Fed policy meeting on September 18.
“This isn’t the CPI report the market wanted to see,” Seema Shah, chief global strategist at Principal Asset Management, wrote in reaction to the report. “With core inflation coming in higher than expected, the Fed’s path to a 50 basis point cut has become more complicated.”
“The number is certainly not an obstacle to policy action next week, but the hawks on the committee will likely seize on today’s CPI report as evidence that the last mile of inflation needs to be handled with care and caution — a formidable reason to default to a 25 basis points reduction.”
“Last week’s labor market data might have left the odds of a 25bps cut vs. a 50bps cut as a toss-up, but today’s inflation data tips the scales in favor of 25bps”, Elyse Ausenbaugh, head of investment strategy at JPMorgan Wealth Management said.
Furthermore, the inflation includes the shelter index rose by 5.2% from July, Owener’s Equivalent Rent increased by 0.4% and 0.5%, the energy index decreased by 0.8% in August, and the food index increased by 2.1%.
Therefore, the price index affects the increase in other policies including vehicle insurance (16.5%), medical care (3%), recreation (1.6%), and education (3.1%).
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