Overview
- The Labor Department’s CPI showed consumer prices rose 0.4% from the prior month and 3.4% year-over-year in August, with core CPI up 0.3% month and 2.4% year.
- Gasoline jumped about 3.9% in August and was the main driver of the monthly increase, a rise that analysts link to oil supply disruptions related to the Iran conflict.
- Average wages increased roughly 3.1% year-over-year, leaving pay growth below headline inflation and eroding household purchasing power.
- Markets moved to price in a possible rate hike at the Federal Reserve’s Sept. 16 meeting as officials debate whether higher energy-driven inflation warrants tightening.
- Broader data showing modest GDP growth and softer real spending complicate the Fed’s choice and make future energy and wage trends key to whether inflation will fall back toward 2%.