CPI report

US inflation was firmer than expected in August, likely keeping the Federal Reserve on track for a third-straight 75 basis-point interest-rate hike.

Inflation did not ease as expected in August, with an 8.3 percent rise in the Consumer Price Index showing that the squeeze on consumers remains acute.

The global economy is slowing sharply, and threats remain to the American recovery if European sanctions force millions of barrels of Russian oil off the global market in the months to come. The National Federation of Independent Business reported on Tuesday that its Small Business Optimism Index rose in August as inflation anxiety eased, continuing a rebound from its depths earlier this year. [have](https://www.nytimes.com/2022/06/10/business/economy/may-2022-cpi-inflation.html) [repeatedly](https://www.nytimes.com/live/2022/07/13/business/cpi-report-inflation) [predicted](https://www.nytimes.com/2022/02/10/business/economy/inflation-cpi-january-2022.html)that inflation was about to decelerate only to have those expectations scuppered. Biden and his party, as Democrats seek to retain control of the House and Senate. Biden has claimed progress in the fight against inflation, including with the signing last month of an energy, health care and tax bill that Democrats called the Inflation Reduction Act. “And then of course all of this is further exacerbated by what’s going on with the war in the Ukraine.” That could be poised to continue, because those prices are closely linked to wages, which have been climbing notably as a result of a strong job market with low unemployment and worker shortages that span many fields. Last Thursday, India also [banned exports](https://www.wsj.com/articles/indias-rice-export-ban-will-further-strain-global-food-supplies-11662722548) of one kind of rice and put a tax on others, in an effort to shore up supplies and fight domestic inflation. After peaking at $5.02 in June, gasoline prices have dropped for 91 straight days, and the national average stood at just over $3.70 a gallon on Tuesday, data from AAA show. A bout of bird flu earlier this year made chickens and eggs scarce, driving up the prices of both. Stock prices swooned as Wall Street digested the possibility that the Fed might need to be even more aggressive in constraining the economy in order to wrangle an inflation problem that is worse than anything America has faced since the 1980s. Food prices in August were up 11.4 percent from the same month a year ago.

Tuesday's US economic docket highlights the release of the critical US consumer inflation figures for August, scheduled later during the early North A.

Gold extended its slide and dropped below $1,700 for the first time in a week on Tuesday. EUR/USD came under heavy bearish pressure and lost more than 100 pips following the US inflation report, which showed a stronger-than-expected increase in Core CPI in August. GBP/USD suffered large losses and dropped below 1.1550 in the early American session on Tuesday. The author makes no representations as to the accuracy, completeness, or suitability of this information. The purchasing power of the USD is dragged down by inflation. In case the pair clears that hurdle and flips into support, it could test 1.0200 (psychological level, Monday high) and target 1.0245 (static level) afterwards.” “On the downside, 1.0100 (200-period SMA, Fibonacci 50% retracement) aligns as key support. The immediate market reaction to the report, however, is more likely to be limited as investors now start repositioning for the FOMC monetary policy meeting on September 20-21. The yearly rate is also expected to decelerate to 8.1% in August from the 8.5% previous. This could drag the US Treasury bond yields and the USD lower. This, in turn, keeps the US dollar depressed near the monthly low. We believe the YoY headline CPI should fall five-tenths to 8.0%, while core should tick up a tenth to 6.0%.”

August inflation data arrives little over a week before Federal Reserve decides rate increase.

The Fed is performing a "delicate balancing act," said Scott Schuh, an economics professor at the University of West Virginia. But other indicators suggest the U.S. Prices rose broadly outside of the energy sector. In August, the median of consumer responses showed that they expect inflation to fall to 5.7% in one year and 2.8% in three years, a New York Federal Reserve survey into an economic downturn and putting millions out of work. The national average price for a gallon of gas stood at $3.72 on Monday, having fallen well below a peak of $5.01 in mid-June, according to But the approach risks tipping the U.S. U.S. The Fed has instituted a series of aggressive interest rate hikes in recent months as it tries to slash price increases by slowing the economy and choking off demand. On a monthly basis, the consumer price index rose 0.1% in August, inching upward from the flat month-to-month movement in July, according to the Bureau of Labor Statistics. Measures of the consumer prices for shelter, new vehicles and apparel all rose at a faster rate in August than they had over the month prior. The consumer price index, or CPI, rose 8.3% over the past year in August, a slight slowdown from 8.5% in July, according to the bureau.

The consumer price index for August was expected to decrease 0.1% from the previous month and increase 8% from a year ago, according to Dow Jones.

Within the jump in food costs, bread prices rose 2.2% on the month and are up 16.2% from a year ago. To combat the broad surge in the cost of living, the Federal Reserve has raised interest rates four times this year for a total of 2.25 percentage points. The economy has broadly struggled in 2022 after posting its best year since 1984 last year, and inflation has played a major role. However, they remained down 2.8% from a year ago. Specifically, policymakers are concerned about a huge gap between job openings and available workers as labor force participation is stuck below its pre-pandemic levels. That is the most stubborn of everything the Fed is fighting at this point." Excluding volatile food and energy costs, CPI rose 0.6% from July and 6.3% from the same month in 2021. That has resulted in rising wages that have in turn put pressure on prices. "Today's CPI reading is a stark reminder of the long road we have until inflation is back down to earth," said Mike Loewengart, head of model portfolio construction for Morgan Stanley's Global Investment Office. Markets had been widely expecting the Fed to enact a 0.75 percentage point rate increase at its meeting next week. The respective year-over-year forecasts were for 8% and 6% gains. "It's very clear to them that it's food, it's transportation and it's rent.

The August CPI inflation rate fell but core inflation reaccelerated, locking in a big Fed rate hike and dealing a blow to the Dow Jones.

Prices for transportation rose 0.5% on the month and 11.3% from a year ago. Core goods prices rose 0.5% on the month and 7.1% from a year ago, a tick up from July's 7% increase. But inflation has been too high for too long, so there's increased risk that households will begin to expect higher inflation in the future. Core prices are again the focus, which is a return to normal. Inflation in nonenergy services prices, which affects 56% of consumer budgets, has yet to subside, rising 0.6% on the month and 6.1% from a year ago, vs 5.5% in July. Prices for used cars and trucks fell 0.1% on the month. Even worse for the Dow Jones and broader stock market, Wall Street is now pricing in a rise in the Fed's key rate to a range of 4%-4.25% by the end of 2022. The annual core inflation rate rose to 6.3% from 5.9% in July. The 10-year Treasury yield, which closed near a 3-month high of 3.36% on Monday, rose 7 basis points to 3.43%. The core CPI rose 0.6% from July. The CPI inflation rate eased to 8.3%, retreating from July's 8.5% and June's 9.1% rate, amid falling gas prices. The CPI inflation rate continued to pull back from a 40-year peak in August, but less than expected.

Inflation saw a 0.1% for August according to the CPI report, but this was almost entirely due to gasoline prices, other prices rose more than the Fed wanted ...

So markets believe that today’s report has made the Fed slightly more nervous about where inflation is trending. inflation may be trending in the right overall direction, but it’s not getting there fast enough for the Fed. The Fed wants to see a broad range of prices signal that the wave of inflation is past, that’s not a conclusion that’s easy to draw from this CPI report. So today’s inflation report despite the low month-on-month number is not good news for markets. Even though food costs rose 0.8% for the month, which is high, that’s still the lowest level of food price inflation that we’ve seen in many months. Still the CPI report was not entirely negative.

Bitcoin falls by 7.5% amid a wider sell-off in the crypto market after the August CPI data came in higher than expected.

Break 19k, and it goes to the main target of 14k-16k for the last low.— il Capo Of Crypto (@CryptoCapo_) Sign up here!](https://www.kitco.com/services/e-mail-lists-signup.html) [(Kitco News)](/) - The cryptocurrency market faced significant downward pressure following Tuesday’s higher-than-expected Consumer Price Index (CPI) print, which came in at an annual increase of 8.3% after 8.1% was expected. Current pivot is 21k. [ETH](https://www.kitco.com/price/ethereum)), which had rallied to start the week in anticipation of its upcoming Merge, saw its price plummet 9.42% from its daily high of $1,760 to a low of $1,592 before support arrived to stem the outflow and bid it back above $1,600. [Editor's Note: With so much market volatility, stay on top of daily news! [BTC](https://www.kitco.com/price/bitcoin)) traders were bullish in the early hours on Tuesday, which resulted in the price of BTC rising to resistance at $22,800 before the CPI announcement sparked a 7.5% sell-off in price that resulted in the top crypto hitting a low of $21,080.

U.S. stocks fell sharply at the market open after August inflation data came in hotter than expected.

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