Us inflation

U.S. consumer prices unexpectedly rose in August and underlying inflation accelerated amid rising costs for rents and healthcare, giving the Federal Reserve ...

Rents are sticky and account for a significant share of the CPI basket, meaning that inflation will remain elevated for some time. The Fed has twice hiked its policy rate by three-quarters of a percentage point, in June and July. "Wages and shelter costs will remain the primary drivers of future inflation," said Sung Won Sohn, finance and economics professor at Loyola Marymount University in Los Angeles. Owners equivalent rent, a measure of the amount homeowners would pay to rent or would earn from renting their property, increased 0.7%. Economists had forecast the so-called core CPI increasing 0.3%. The dollar rallied against a basket of currencies. 8 mid-term elections, which are expected to flip the House of Representatives into Republican hands. Beyond the dilemma the August inflation numbers present to the U.S. With a resilient labor market supporting strong wage growth, inflation has probably not peaked, keeping the Fed on an aggressive monetary policy path for a while. Economists polled by Reuters had forecast the CPI dipping 0.1%. The consumer price index edged up 0.1% last month after being unchanged in July. Food prices surged 11.4% over the last year, the largest 12-month increase since May 1979.

US inflation ticked back up in August, despite plunging gas prices, according to data from the Bureau of Labor Statistics released Tuesday.

A prolonged period of historic rate hikes could do serious damage to the US economy. Almost all other categories saw price increases, including shelter, which increased 0.7% in August and is up 6.2% year-on-year, the largest increase since 1991. The last time the headline CPI rate declined in consecutive months was the first part of 2020. The month-on-month gain of 0.6% was double what economists had expected. Economists had projected that inflation would fall from July to August by 0.1%, after holding steady at 0% growth from June to July. On a monthly basis, consumer prices rose 0.1% from July, according to the Consumer Price Index, which measures a basket of consumer goods and services.

Consumer prices jumped 8.3 percent in August compared with a year earlier, new US data shows.

The average 30-year mortgage rate jumped to nearly 5.9 percent last week, according to mortgage buyer Freddie Mac, the highest figure in nearly 14 years. The cost of rental apartments and other services, such as healthcare, are likely to keep rising in the months ahead. Republicans have sought to make inflation a central issue in the midterm congressional elections. Many businesses are also reporting signs that supply backlogs and inflation are beginning to fade. But executives at Kroger, the nation’s largest grocery chain, said that falling prices for farm commodities like wheat and corn could slow cost increases for food. The central bank is expected to announce another big increase in its benchmark interest rate next week, which will lead to higher costs for many consumer and business loans. In the past year, they have soared 13.5 percent — the biggest 12-month increase since 1979. “Overall, prices have been essentially flat in our country these last two months: that is welcome news for American families, with more work still to do. But excluding the volatile food and energy categories, so-called “core prices” jumped 0.6 percent from July to August — up sharply from 0.3 percent the previous month and dashing hopes, for now, that core prices might be starting to moderate. In the 12 months ending in August, core prices jumped 6.3 percent, up from 5.9 percent in July. Core prices typically provide a clearer read on where costs are headed than overall inflation does. On a monthly basis, prices rose 0.1 percent, after a flat reading in July.

Sharply lower prices for gas and cheaper used cars slowed U.S. inflation in August for a second straight month, though many other items rose in price, ...

The Fed’s rapid rate increases — the fastest since the early 1980s — typically lead to higher costs for mortgages, auto loans and business loans, with the goal of slowing growth and reducing inflation. [escalated families’ grocery bills](https://www.pbs.org/newshour/economy/this-new-orleans-food-bank-opened-to-serve-more-people-now-inflation-is-forcing-them-to-turn-dozens-away), rents and utility costs, among other expenses, inflicting hardships on many households and deepening gloom about the economy despite strong [job growth](https://www.pbs.org/newshour/economy/job-openings-rose-in-july-dashing-federal-reserve-hopes-for-cooling) and low unemployment. A shortage of available houses has also forced more people to keep renting, thereby intensifying competition for apartments. [Groceries continue to rise rapidly](https://www.pbs.org/newshour/nation/long-lines-return-to-u-s-food-banks-as-inflation-hits-high), jumping 0.7 percent from July to August. The cost of rental apartments and other services, such as health care, are likely to keep rising in the months ahead. Republicans have sought to make inflation a central issue in the midterm congressional elections. Many businesses are also reporting signs that supply backlogs and inflation are beginning to fade. But executives at Kroger, the nation’s largest grocery chain, said that falling prices for farm commodities like wheat and corn could slow cost increases for food. But excluding the volatile food and energy categories, so-called core prices jumped 0.6 percent from July to August — up sharply from 0.3 percent the previous month and dashing hopes, for now, that core prices might be starting to moderate. Inflation remains far higher than many Americans have ever experienced and is keeping pressure on the Fed. In the 12 months ending in August, core prices jumped 6.3 percent, up from 5.9 percent in July. On a monthly basis, prices rose 0.1 percent, after a flat reading in July.

An unexpected rise in US consumer prices sees global share markets take fright on worries about more aggressive interest rate rises by the US central bank.

The FTSE 100 in London dropped 1.2 per cent to 7,386, the DAX in Germany lost 1.6 per cent to 13,189, and the CAC 40 in Paris fell 1.5 per cent to 4,728. The CPI increased by 8.3 per cent over the year to August compared to 8.5 per cent over the year to July. The US central bank wants to see US inflation fall to its target of 2 per cent and has pledged aggressive rate hikes to achieve that. The Dow Jones index fell 3.9 per cent, or 1,276 points, to 31,105, the S&P 500 index lost 4.3 per cent to 3,933, while the Nasdaq Composite dropped nearly 5.2 per cent to 11,634. It has raised benchmark interest rates from near zero in March to the current rate of 2.25 per cent to 2.5 per cent. At 10:20am AEST, the All Ordinaries index was down 2.7 per cent to 7,056, and the ASX 200 had also lost 2.7 per cent to 6,818. Core inflation, which removes volatile food and energy prices, increased more than expected, rising to 6.3 per cent over the year to August from 5.9 per cent in July. The pace of inflation eased over the year as the price of goods dropped because of an easing of supply chain pressures, and a shift in spending to services. Economists expected a 0.1 per cent fall in the US Consumer Price Index after it was unchanged in July because of a decline in oil prices. In the first half hour of trade, the All Ordinaries index and the ASX 200 fell as much as 2.8 per cent, the biggest fall in three months. - At 10:20am AEST, the All Ordinaries was down 2.7pc to 7,056, and the ASX 200 also lost 2.7pc to 6,818 - The FTSE 100 fell 1.2pc to 7,386, the DAX lost 1.6pc to 13,189, and the CAC 40 fell 1.5pc to 4,728

US inflation was firmer than expected in August, probably keeping the Federal Reserve on track for a third-straight 0.75 percentage point interest rate ...

Shelter costs – which are the biggest services’ component and make up about a third of the overall CPI index – continue to rise. Core CPI, which strips out the more volatile food and energy components, advanced 0.6 per cent from July and 6.3 per cent from a year ago. Officials have said their decision next week will be based on the “totality” of the economic data they have on hand, which also illustrates a strong labour market and weakening consumer spending. Traders boosted bets that the Fed will raise interest rates by three-quarters of a percentage point, now seeing such an outcome as locked in. Price pressures are still historically elevated and widespread, pointing to a long road ahead towards the Fed’s inflation target. The consumer price index increased 0.1 per cent from July, after no change in the previous month, Labour Department data showed on Tuesday.

Stock prices tumbled and bond yields rose as many investors feared a more aggressive Federal Reserve.

Worsening food inflation is a particular strain on lower-income families, more of whom have had to turn to food banks and other aid as inflation has worsened. The price to ship spices from overseas have quadrupled, she said, and she’s seen little relief so far despite reports that such costs are declining. A shortage of available houses has also forced more people to keep renting, thereby intensifying competition for apartments. Chicken prices have risen nearly 17% in the past year. Furniture, sports gear and new cars became more expensive last month, suggesting that businesses are still raising prices in response to robust consumer demand. And in the year ending in August, core prices leapt 6.3%, up from 5.9% in July. Republicans have sought to make inflation a central issue in the midterm congressional elections. Consumer prices surged 8.3% last month compared with a year earlier, the government said Tuesday, down from an 8.5% increase in July and a four-decade high of 9.1% in June. Ongoing price increases for raw materials — and labor — have left many small businesses struggling. In the past year, they have soared 13.5% — the biggest 12-month increase since 1979. But grocery prices have continued to rise rapidly, jumping 0.7% from July to August. Further Fed rate hikes could weaken growth so much as to push the economy into a recession.

Even as U.S. motorists have gladly watched gasoline prices fall sharply in recent weeks — down 10.6% from their peak — costs for food and apartment rentals have ...

The U.S. Even with high inflation, the U.S. Bankrate.com senior economic analyst Mark Hamrick said in a statement, "The prices for necessities continue to fuel this fire, including shelter, food, and medical care. The inflation rate was up at an annualized 8.3% rate in August, the Bureau of Labor Statistics reported. economy, boosting borrowing costs for businesses and consumers, with the Fed hoping the higher rates will dampen consumer demand and thus curb inflation. And real wages went up again for a second month in a row, giving hard-working families a little breathing room."

"We now expect a 75bp hike in September followed by 50bp hikes in November and December, which would take the funds rate to 4-4.25% by the...

The market currently prices in a 22% chance of this happening. "It’s the Fed’s job to stay in sync with market rates, which means it needs to continue raising key interest rates. One, the possibility of a full 100-basis-point hike has increased. “We have raised our forecast for the Fed’s December meeting to a 50 basis point rate hike (vs a 25 basis point previously). If the Fed ups key rates by 75 basis points next week, which Wall Street already anticipates, rates will sit at around 3% to 3.25%. In a note following the August CPI data, it wrote: “August core CPI rose by 0.57% month-over-month, well above expectations, and the year-on-year rate rose two-tenths to 6.3%. Unfortunately, this decline was not enough to offset other inflationary costs, which means that inflation is structural and baked into service costs," said Market360 editor Louis Navellier. So, the central bank is under pressure to raise key interest rates as high as 4%. Airfares declined 5%, in line with our expectations. The pan-European STOXX 600 index lost 1.6% led by the rate-sensitive real estate sector (-3.9%). We now expect a 75 basis point hike in September followed by 50 basis point hikes in November and December, which would take the funds rate to 4-4.25% by the end of the year.”

Investors are waking up to the reality the Fed hasn't even started to bring down core inflation and a new regime for markets has arrived.

[Sign up to our weekly Opinion newsletter.](https://login.myfairfax.com.au/signup_newsletter/10146?channel_key=9ME3ACTT4ZYY1fEMfvR2EA&callback_uri=https://www.afr.com) [James Thomson](/by/james-thomson-1446yx)is a Chanticleer columnist based in Melbourne. On Monday, at the famous SALT hedge fund conference in New York, Bridgewater Associates co-chief investor Greg Jensen warned investors were overestimating the Fed’s ability to bring inflation down quickly, creating the risk of a deep, broad and lengthy recession. For example, it’s hard to see how inflation doesn’t fall without unemployment jumping and the US economy slowing down markedly. “Until the Fed can tame that beast, there is simply no room for a discussion on pivots or pauses.” And might inflation here also prove stickier than we thought? And what will it take to tame that beast? Rather, what shocked the market was heat in the economy across the board. The ASX opened with a bang too, with the benchmark ASX 200 down 2.7 per cent in morning trade. This leads to bad outcomes. Sky-high debt levels will give central banks less room to manoeuvre, BlackRock says. Every single stock in the Nasdaq 100 finished in the red. Seema Shah, chief global strategist at Principal Global Investors, says it is likely that headline inflation has peaked, as had largely been expected.

Next week's meeting of the Federal Reserve board is expected to deliver another supersized 75 basis points interest rate hike following the reacceleration ...

... Maja's career in journalism spans well over a decade across finance, business and politics. Although the US had a relatively strong results season with beats outweighing misses, forward guidance has been subdued.

The broad S&P 500 share gauge fell 2 per cent at the opening bell, while the Nasdaq Composite — which is stacked full of tech companies that are more sensitive ...

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It's not farfetched to say that employee inside the company could take over the accounts of all of the senators in this room. Marc Filippino Plus, a US effort ...

Make sure you check back tomorrow for the latest business news. You can read more on all of these stories at FT.com. So I think we’re at the point where the US has calmed quite a few nerves and it’s been watered down. Will it even get off the ground? So Twitter denies all this, but Hannah, these allegations also come right as Twitter is in this huge legal battle with Elon Musk. So there’s the allegation that, you know, there’s these lax controls, but also that the company has sort of deliberately chosen not to address them. For 30 years, my mission has been to make the world better by making it more secure. You know, stocks bottomed out in June and we’ve seen a little bit of a pick-up since then as people have been debating whether or not the Fed can achieve what’s called a soft landing. I’m Marc Filippino, and here’s the news you need to start your day. The consumer price index for August showed inflation rising a tenth of a per cent over the previous month, not falling, as economists had expected. Wall Street had its worst day in more than two years after seeing the latest US inflation data. Marc Filippino

Economists upgraded the RBA's tightening path as bets fly that the US Federal Reserve will raise rates 1 percentage point next week.

Bond futures are fully priced for a 0.25 percentage point increase by the Reserve Bank in October, on the way to a peak of around 3.8 per cent by June up from 3.5 per cent on Tuesday. Nomura formalised its forecast for a full percentage point increase to the Fed funds rate next week, up from 0.75 percentage points previously projected. “The stickier inflation proves that a higher nominal Fed funds rate is needed to achieve the FOMC’s objectives,” said Mr Martin. It’s a matter of how much damage there will be.” Trimmed mean is a measure of core inflation and is the RBA’s preferred indicator. Email Cecile at [[email protected]](mailto:[email protected]) The Euro Stoxx 50 retreated 1.7 per cent and the FTSE 100 1.2 per cent. They had expected only a 0.75 percentage point increase before the CPI data. Meanwhile, US Treasury yields spiked and the bond market’s most reliable recessionary indicator – the inverted spread between short-and long-term rates – widened further. [The US CPI rose 0.1 per cent month-on-month, and edged up 8.3 per cent year-on-year.](https://www.afr.com/world/north-america/us-inflation-comes-in-higher-than-forecast-big-fed-hike-expected-20220913-p5bhug) A Reuters poll had suggested the monthly CPI rate of change would dip by 0.1 per cent, and year-over-year growth would rise by 8.1 per cent. Australian bond yields jumped in sympathy, with the three-year rate 10 basis points higher to 3.36 per cent and the 10-year 6 basis points higher at 3.7 per cent. Nomura upgraded its forecast for the Reserve Bank’s October cash rate decision to a 0.5 percentage point increase to 2.85 per cent, up from a previous forecast for an increase of 0.25 percentage points.

“It's been pretty chaotic on the markets today.” He said there is some talk of the US Federal Reserve imposing a recession to bring prices down. Press PLAY ...

Economics editor at the Australian Financial Review, John Kehoe, said the US inflation data was higher than what had been predicted. The Australian share market has shed billions of dollars, in what has been the worst opening hour of trade in three months. US inflation data triggers sharp fall on the Australian share market

Surging inflation in the world's largest economy could lead to steeper interest rate increases in Australia, financial experts have warned.

The Commonwealth Bank’s head of fixed income and rates strategy, Martin Whetton, said markets now expected a sharper increase in US interest rates, but he did not think the US data meant Australia’s inflation would also be higher. “It’s US inflation, and it’s not the same stuff as Australian inflation. National Australia Bank chief economist Alan Oster said the data showed US inflation was hard to tame, but he thought markets were over-reacting. Nathan said the US Fed’s interest rate settings indirectly affected interest rates in other countries, including Australia. However, other economists talked down the implications of the US surge in inflation for Australia. We also have the issue of unemployment being so low, and potential wage inflation,” Nathan said.

Potential for further rate hikes in the US points to more bad news for Australia too, expert warns.

It eventually closed down 181.1 points, or 2.58%, to a one-week low of 2828.6. “This is the highest rate since the quarterly series commenced in 1994, and about 0.5 percentage points above its pre-pandemic level,” ABS head of labour statistics Lauren Ford said. “This shows that inflation remains a difficult beast to tame and points to further interest hikes in Australia as well,” he said. Swinburne University senior finance lecturer Mardy Chiah said the potential for further rate hikes in the US pointed to more bad news for Australia, with a key US figure on consumer prices jumping much more than expected. The US federal reserve is expected to continue jacking up the cash rate as Wall Street suffered its biggest hit in two years. More than $60bn has been wiped off the Australian share market after huge losses in the US and there are fears the sell-off could herald more interest rate pain.

Surging inflation in the world's largest economy could lead to steeper interest rate increases in Australia, financial experts have warned.

The Commonwealth Bank’s head of fixed income and rates strategy, Martin Whetton, said markets now expected a sharper increase in US interest rates, but he did not think the US data meant Australia’s inflation would also be higher. “It’s US inflation, and it’s not the same stuff as Australian inflation. National Australia Bank chief economist Alan Oster said the data showed US inflation was hard to tame, but he thought markets were over-reacting. Nathan said the US Fed’s interest rate settings indirectly affected interest rates in other countries, including Australia. However, other economists talked down the implications of the US surge in inflation for Australia. We also have the issue of unemployment being so low, and potential wage inflation,” Nathan said.