Core Inflation Rose More Than Expected In August As Price Pressures Remain High
Core inflation climbed more than expected last month, rising 0.3% in August, 0.1 percentage points more than forecasts. The annual rate clocked in at 2.4%, as the Dow Jones consensus expected.
The Bureau of Labor Statistics showed that the headline figure climbed 0.4% last month, in line with expectations. The year-on-year figure stood at 3.4%, also in line with expectations.
“Indexes that increased over the month include communication, lodging away from home, airline fares, education, and used cars and trucks. Conversely, the index for medical care and the index for motor vehicle insurance were among the major indexes that decreased in August,” BLS added.
The report is the latest the Federal Reserve will see before announcing its policy decision next week.
The European Central Bank (ECB) raised its interest rates on Thursday, noting that the war between the U.S. and Iran keeps putting pressure on prices.
The benchmark rate now stands at 2.5% compared to the previous 2.25%. The body noted in a statement that the decision “underscores the Governing Council’s commitment to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term.”
The body went on to say that its baseline projections now stand at 3% this year, 2.5% in 2027 and 2.1% in 2028. Core inflation, in turn, is set to be stickier: “the baseline foresees 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028. Compared with June, the baseline projection for inflation in 2026 is unchanged, while it has been revised up for 2027 and 2028,” the document says.
The ECB warned that outlooks remain “highly uncertain, with risks to the upside for inflation and to the downside for economic growth.”
“In relation to the energy shock, the updated scenarios put together by staff illustrate the broad range of outcomes for how growth and inflation would evolve under different assumptions about its intensity and duration, as well as its indirect and second-round effects,” the document adds.
