WASHINGTON: Consumer inflation in the United States picked up in August for a second straight month, according to government data released Wednesday, putting the heat on policymakers as they work to lower prices.
The consumer price index (CPI), a key inflation gauge, jumped 3.7 percent from a year ago, picking up pace from July’s 3.2 percent figure, said the Labor Department. But a measurement stripping out volatile segments cooled.
All eyes are on the report, which is expected to have a bearing on the US central bank’s interest rate decision released next week.
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The Federal Reserve has lifted the benchmark lending rate rapidly since March last year to tamp down demand and sustainably lower inflation – but the current figure remains stubbornly above officials’ two percent goal.
In August, higher gasoline costs bumped up headline inflation but the “core” reading – removing the volatile food and energy components - cooled to 4.3 percent on an annual basis.
“The index for gasoline was the largest contributor to the monthly all items increase, accounting for over half of the increase,” said the Labor Department.
While the latest report could give the Fed some pause, analysts expect it may not translate to further rate hikes.
If “core” readings continue to weaken, “that will be taken as a sign by the Fed that perhaps further tightening is not necessary,” said Gregory Daco, EY chief economist.
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