Stubborn inflation raises prospect of Fed rate hike

Live updates

1. 2d ago

   August Inflation Rises 3.4% as Core Costs Top Forecasts

   U.S. consumer inflation accelerated in August with annual prices rising 3.4%, driven largely by spiking gas prices. Core costs also climbed and exceeded forecasts, strengthening the case for the Federal Reserve to increase interest rates next week. Economists suggest a September rate hike is now almost certain, while market odds for the move have surged to 90%. This stubborn price pressure comes as the Fed remains undecided on its next step amid a backdrop of rising interest rates and volatile oil prices.

   Why it matters

   The Federal Reserve manages inflation by adjusting interest rates to cool economic activity. Persistent core inflation suggests that price pressures are embedded in the economy beyond temporary energy spikes. High inflation reduces consumer purchasing power and puts pressure on government bond holders.

   What is confirmed

   • Consumer prices rose 3.4% annually in August.
   • U.S. consumer inflation accelerated in August.
   • Core inflation costs climbed and exceeded forecasts.
   • Spiking gas and oil prices contributed to the rise in inflation.

   Still unconfirmed

   • Economists say a September Fed rate hike is all but guaranteed.
   • Odds of a Fed rate hike have surged to 90%.
   • Fed official Warsh faces new pressure to hike rates.

   What to watch next

   • The Federal Reserve interest rate decision next week.
   • Upcoming energy price reports to determine if oil spikes persist.
   Sources used for this update (14)

   1. AP News — Inflation report lands amid spiking oil prices, rising interest rates and Fed on fence
   2. CNN — Even a cooler inflation report may not be enough to keep the Fed from raising rates next week
   3. The New York Times — CPI Report Live Updates: Inflation Data to Offer Update on Stubborn Price Pressures
   4. cnbc.com — Inflation held sticky in August, with consumer prices rising 3.4% annually and core costs climbed
   5. reuters.com — US consumer inflation picks up in August
   6. CBS News — Fed rate hike in September is all but guaranteed after CPI report, economists say
   7. Bloomberg.com — US Core CPI Tops Forecasts, Bolstering Case for Rate Hike
   8. The Hill — Stubborn inflation raises prospect of Fed rate hike
   9. WSJ — Inflation Comes In Hot
   10. PBS — U.S. inflation accelerated last month as gas prices spiked, squeezing Americans' finances
   11. Yahoo Finance — Fed rate hike odds surge to 90% on monthly jump in core prices
   12. PBS — News Wrap: August inflation report shows consumer prices up 3.4%
   confidence 90%