US Core Inflation Rises for First Time in Six Months

The United States core inflation rose faster than expected in August on a monthly basis, highlighting the bumpy nature of easing price pressures, according to Bloomberg.

Bureau of Labor Statistics data released Wednesday showed that the core consumer price index, which excludes food and energy costs, rose 0.3% from July, marking the first acceleration in six months. Compared to last year, the index rose 4.3%, in line with estimates and representing the smallest increase in nearly two years.

Economists favor the core index as a better tool for measuring core inflation than the overall CPI, as this measure rose 0.6% from the previous month, recording the largest rise in more than a year, and by 3.7% from a year ago, reflecting higher energy prices. Gasoline costs accounted for more than half of the progress in the overall index in August, according to the Bureau of Labor Statistics.

The report adds to concerns that renewed momentum in the economy is igniting price pressures. While Fed officials have become more optimistic about their ability to tame inflation without triggering a recession, a reacceleration in price growth could force them to push interest rates to higher levels, with the risk of triggering a recession in the process.

The CPI is one of the last major reports Fed officials will see before their meeting next week, and monetary policymakers are largely expected to keep interest rates steady.

Bank Chairman Jerome Powell said last month that interest rates will remain high and could rise further if the economy and inflation do not calm down.

Treasury yields jumped, while S&P 500 futures fell, and the dollar index rose.