U.S. Consumer Prices Rise 2.9%
Jobless Claims Surge
Weak Labor Market Raises Prospects of Fed Rate Cut
Despite concerns that the high-tariff policy of the Donald Trump administration would fuel inflation, the U.S. consumer price index (CPI) for August did not deviate significantly from market expectations.
On September 11 (local time), the U.S. Bureau of Labor Statistics (BLS) announced that the consumer price index for August rose 2.9% year-on-year. This figure is in line with market estimates and marks a slight increase from July's 2.7%. On a month-on-month basis, the CPI rose by 0.4%, up from 0.2% in July and slightly above the market forecast of 0.3%. Food prices increased by 0.5% over the month, driving the overall rise in consumer prices.
The core CPI, which excludes energy and food, rose 3.1% year-on-year, maintaining the same level as in July. While there have been concerns in the market that the Trump administration's broad tariff policies would spur inflation, the August CPI remained within the expected range, providing some relief. Business Insider assessed, "The impact of tariffs is gradually being reflected in prices, but this figure was milder than expected, easing some market anxiety."
The employment data released on the same day heightened market concerns. New jobless claims for the week of August 31 to September 6 increased by 27,000 from the previous week to 263,000, marking the highest level in about four years.
Reuters analyzed that the simultaneous rise in inflation and weakness in the labor market has significantly increased the likelihood that the Federal Reserve will implement a rate cut this month.
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