Soaring gas prices seen boosting U.S. consumer inflation in August — SkimNews
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- U.S. consumer prices accelerated in August with CPI rising 0.4% month-over-month (after 0.1% in July) and 3.4% year-over-year, driven by a rebound in gasoline costs following two straight monthly declines.
- Core CPI rose 0.3% in August after 0.2% in July, with the annual rate easing to 2.4% from 2.5%, though economists say tariffs — most recently on Canada — are sustaining price pressures.
- Financial markets priced in roughly a 70% chance of a 25-basis-point rate hike at the Fed's September 15-16 meeting via CME's FedWatch tool, after Thursday's strong August PPI data and last week's robust employment report.
- Oil prices climbed back above $100 per barrel Thursday while diesel hit record highs, signaling inflation would remain elevated and broaden beyond energy.
- President Trump posted "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT," with economists blaming "political intimidation" for a surge in long-term Treasury yields; some expect the Fed to tighten next Wednesday to underscore its independence.
- Fed Chairman Kevin Warsh said the central bank will "have work to do" if policymakers don't gain confidence inflation is heading to 2%, while Governor Christopher Waller had signaled openness to keeping rates steady if data confirmed cooling pressures.
Why it matters: Economists expect a Fed rate hike next week specifically to underscore central bank independence after Trump publicly demanded cuts and threatened to halt trade with deficit countries. Strong PPI and CPI data give hawks the cover; markets price a 70% chance of a 25-basis-point move at the September 15-16 meeting.
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