US CPI rises 0.4% in August

The United States Consumer Price Index rose 0.4% in August after a 0.1% increase in July, according to figures released on 11 September by the Bureau of Labor Statistics. Over the twelve months through August, consumer inflation stood at 3.4%, matching the annual pace recorded in July. The figures matched expectations from economists polled by Reuters, who anticipated a 0.4% monthly rise and a 3.4% annual increase.

Gasoline prices rebounded after two consecutive monthly declines, driving headline inflation higher. Excluding volatile food and energy components, core CPI advanced 0.3% month-on-month following a 0.2% increase in July. On an annual basis, core CPI reached 2.4% in August, down slightly from 2.5% in July. The Federal Reserve tracks the separate Personal Consumption Expenditures price index toward its 2% target.

Producer prices also rose in August, according to government data released on 10 September. Following that report, economist estimates for August core PCE inflation ranged between 0.15% and 0.28% on a monthly basis, compared with a 0.2% advance in July. Annual core PCE estimates ranged between 3.2% and 3.3%, compared with 3.3% in July. Oil prices topped $100 per barrel on 10 September, while diesel prices reached record highs.

Financial markets saw an almost 70% probability of a 25 basis point rate hike at the 15 to 16 September monetary policy meeting, according to the CME FedWatch tool before the CPI release. The federal funds target range stands between 3.5% and 3.75%.