Higher fuel prices, rents and other lodging costs have driven U.S. consumer inflation higher than economists had expected. Consumer price index (CPI) figures released by the Bureau of Labor Statistics indicated prices rose by 0.4% in August, higher than the market expectations of a 0.3% increase. On a 12-month basis the consumer inflation rate increased from July’s 1.7% to 1.9%.
Core prices, a measure of prices which strips out food and energy price changes, rose by 0.2% after three months of 0.1% increases. Annualised core inflation remained steady at 1.9% after rounding. Both the monthly and 12 month figures were in line with expectations.
ANZ senior economist David Plank thought the figures provided evidence of a decline in deflationary pressures. “While the headline was affected by a hurricane-related boost to gasoline (+6.3%), there were signs that some of the things that have been dragging are now stabilising or at least slowing the pace of declines…More than one month’s data will be needed to confirm this, of course, but if it continues it would certainly provide some food for thought to bond markets around the prospects of future rate hikes.”