Consumer prices in the US rose slightly in August, but core inflation showed resilience, which may prevent the Federal Reserve from implementing a half-point interest rate cut next week.
The consumer price index rose 0.2% last month after rising 0.2% in July, the Labor Department said on Wednesday. In the 12 months to August, the CPI rose by 2.5%. This is the smallest year-on-year increase since February 2021 and follows a 2.9% rise in July.
Economists polled by Reuters had expected CPI to rise 0.2% and rise 2.6% year-on-year. Although inflation is still above the US central bank's 2% target, it has slowed significantly.
Market US stock index futures extended small losses to 0.35%, pointing to a weak opening on Wall Street. The 10-year US Treasury yield rose to 3.676% and the two-year yield rose to 3.677%. The US dollar index strengthened 0.11% and the euro lost 0.09%.
Peter Cardillo, an economist opined that “this report basically confirms that core inflation still exists. This may ensure a rate cut of a quarter point from the Fed.”
"Core inflation is actually low, especially year-over-year, and it's headed in the right direction, approaching the Fed's 2% target."
