OAN Staff James Meyers
8:28 AM – Wednesday, September 11, 2024
Inflation rose once again in the month of August, causing stir from an outsize rate cut from the Federal Reserve when it meets next week.
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The Consumer Price Index rose 2.5% in August from a year earlier and 0.2% from the previous month, which was in line with economists’ expectations, according to the U.S. Bureau of Labor Statistics.
However, Core CPI, which excludes volatile food and energy prices, rose 3.2% from a year earlier and 0.3% on a monthly basis. The monthly number, which has been driven by high housing costs, was still slightly above expectations for a 0.2% rise.
As the newest numbers create a path for the Fed to move forward with plans to cut interest rates next week, the unexpectedly high core inflation figure dimmers hopes for the 50-basis point cut, which is equal to half a percentage point, which some traders were hoping for versus the common 25-basis-point reduction.
The latest inflation numbers could play a major factor in the presidential race in its final weeks. Former President Donald Trump has heaped blame on Vice President Kamala Harris for the staggering increase in inflation, which started as early as 2021 when global supply chains seized up, causing shortages of parts and labor.
Fed officials have signaled that they’re increasingly confident that inflation is steadily falling back to their 2% target and are now shifting their focus to supporting the job market, which is rapidly cooling.
“Overall, I see significant and ongoing progress toward the (Fed’s) inflation goal that I expect will continue over the remainder of this year,” Christopher Waller, a key policymaker on the Fed’s Board of Governors, said last week.
Meanwhile, food prices are almost 20% more expensive than before the pandemic, increasing 1.1% from a year ago.
Airline fares also increased by 3.9% in August compared to July.
The latest inflation report led to a mixed reaction to stocks. The Dow Jones Industrial Average opened down 0.5%, with the S&P 500 down 0.16% and the Nasdaq composite was up 0.29%.
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