U.S. inflation slowed for a second straight month on a sharp fall in gas prices, yet excluding energy most other items got more expensive in August, a sign that inflation remains a heavy burden for American households.
Consumer prices surged 8.3% in August compared with a year earlier, the government said this morning, down from an 8.5% jump in July and a four-decade high of 9.1% in June. On a monthly basis, prices rose 0.1%, after a flat reading in July.
But excluding the volatile food and energy categories, so-called core prices jumped 0.6% from July to August—up sharply from 0.3% the previous month and dashing hopes, for now, that core prices might be starting to moderate. In the 12 months ending in August, core prices jumped 6.3%, up from 5.9% in July. Rents, medical care services and new cars all grew more expensive in August.
Core prices typically provide a clearer read on where costs are headed than overall inflation does. Stock index futures tumbled on the worse-than-expected core figures, with many investors fearful that the Federal Reserve will now raise interest rates even faster in its drive to curb inflation.
Inflation remains far higher than many Americans have ever experienced and is keeping pressure on the Fed. The central bank is expected to announce another big increase in its benchmark interest rate next week, which will lead to higher costs for many consumer and business loans. Read the full story.
