Inflation moved higher last month as the price of gas, groceries, hotel rooms and airfare rose, along with the cost of clothes and used cars.
Consumer prices rose 2.9% in August from a year earlier, the Labor Department said Tuesday, up from 2.7% the previous month and the biggest increase since January. Excluding the volatile food and energy categories, core prices rose 3.1%, the same as in July. Both figures are above the Federal Reserve’s 2% target.
Typically the Fed would cut its key rate when unemployment rose to spur more spending and growth. Yet it would do the opposite and raise rates — or at least keep them unchanged — in the face of rising inflation. Last month, Chair Jerome Powell signaled that Fed officials are increasingly more concerned about jobs, and are likely to cut their rate when they meet next week. Yet stubbornly high inflation could keep the Fed from cutting very quickly.
On a monthly basis, overall inflatin accelerated, as prices rose 0.4% from July to August, faster than the 0.2% pace the previous month. Core prices rose 0.3% for the second straight month.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Economists forecast that consumer prices rose 2.9% in August from a year earlier, according to a survey of economists by data provider FactSet. That would be an increase from an annual pace of 2.7% in July. Excluding volatile food and energy costs, core inflation is expected to have increased 3.1%, the same as in July. Both figures are above the Fed’s 2% inflation target.
Typically the Fed would cut its key rate when unemployment rose to spur more spending and growth. Yet it would do the opposite and raise rates — or at least keep them unchanged — in the face of rising inflation. Last month, Chair Jerome Powell signaled that Fed officials are increasingly more concerned about jobs, and are likely to cut their rate when they meet next week. Yet stubbornly high inflation could keep the Fed from cutting very quickly.
On a monthly basis, prices are expected to have risen at an accelerated pace, increasing 0.3% from July to August. Core prices are expected to also increase 0.3% on a monthly basis. The cost of groceries and gas are forecast to have risen last month.
