A report from the Labor Department on Wednesday showed that prices rose as expected in August while annual inflation fell to the lowest level since February 2021. The report laid the foundation for the Federal Reserve to cut interest rates by 25 percentage points within a week.
this consumer price indexThe Bureau of Labor Statistics reported that a broad measure of the cost of goods and services in the U.S. economy rose 0.2% for the month, in line with the Dow Jones consensus.
This brought the 12-month inflation rate to 2.5%, down 0.4 percentage points from July levels, compared with expectations of 2.6%.
However, the core Consumer Price Index (CPI), which excludes volatile food and energy prices, rose 0.3% for the month, slightly above expectations of 0.2%. The 12-month core inflation rate was 3.2%, in line with forecasts.
While data shows inflation continues to slow slowly, housing-related costs remain an issue. The housing component of the CPI, which accounts for about one-third of the index’s weight, rose 0.5% and accounted for most of the growth in all indicators. The housing index rose 5.2% compared with the same period last year.
Food prices rose just 0.1%, while energy costs fell 0.8%.
Elsewhere in the report, used car prices fell 1%, health care services fell 0.1% and clothing prices rose 0.3%.
Stock futures were lower after the report, even as Treasury yields soared.
In the federal funds futures market, traders see an 85% chance that the Federal Open Market Committee will approve a 25 percentage point, or 25 basis point, rate cut at the end of its meeting on Sept. 18, according to CME Group.
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