Inflation Remains Elevated as Diesel Prices Hit Record High
Before the report, analysts were forecasting that the Fed would pursue a quarter-point rate hike at next week's meting.
Inflation soared in August, with energy costs driving much of the increase, despite President Trump's calls for a near-term rate cut by the Federal Reserve. The Consumer Price Index (CPI) reported a 0.4% rise in August compared to 0.1% in July, with annual inflation remaining stagnant at 3.4%. Energy costs accounted for over one-third of the overall increases, with gas prices averaging $4.30 per gallon, up from $3 pre-Iran war.
Diesel hit an all-time high of over $6, while core inflation slowed to 0.3% from 0.2%, but year-over-year inflation remained at 2.4%. Energy prices soared 16.3% in the year ending August, with energy commodities like gas and fuel oil increasing by 28%. Food prices rose 0.1% in August, up 2.7% over the past year, though grocery prices saw a 2.2% increase.
High-profile food items like beef saw a 0.6% drop in August, but the beef and veal index rose 5.9% over the year. Economists predict a rate hike at the next Federal Open Market Committee (FOMC) meeting, with 85% chance according to the CME FedWatch tool, despite President Trump's desire for the lowest interest rates in the world.
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