US inflation eased again in August but cost of shelter and food also rose

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United States Consumer Price Index rose 0.1 percent in August on a seasonally adjusted basis after being unchanged in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, inflation increased 8.3 percent, above market expectations of 8.1%.

Increases in the cost of shelter, food, and medical care indexes were the largest of many contributors to the broad-based monthly increase.

These increases were mostly offset by a 10.6-percent decline in the gasoline index while the food prices continued to rise, increasing 0.8 percent over the month as the food at home index rose 0.7 percent.

The energy prices fell 5.0 percent over the month as the gasoline index declined, but the electricity and natural gas increased. The core inflation (less food and energy) rose 0.6 percent in August, a larger increase than in July.

Cost of shelter, medical care, household furnishings and operations, new vehicles, motor vehicle insurance, and education were among those that increased over the month. There were some prices that declined in August, including those for airline fares, communication, and used cars and trucks.

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Overall, inflation increased 8.3 percent over the last 12 months ending August, a smaller figure than the 8.5-percent increase for the period ending July.

Core inflation rose 6.3 percent over the last 12 months, the energy prices increased 23.8 percent for the 12 months ending August, a smaller increase than the 32.9-percent increase for the period ending July.

The food index increased 11.4 percent over the last year, the largest 12-month increase since the period ending May 1979.

data caused the markets to expect a 75 bp rate hike next Wednesday and may mean that the Fed will not slow down the rate hikes after the next decision.

Data released today caused a strong decline on Wall Street, just before the start of the cash session. At the time of writing, Nasdaq loses more than 4%, S&P500 more than 3% and Dow Jones fell more than 2.5%.