Inflation Fluctuations, Retail Surges, Political Turbulence

After peaking at 9.1% in June 2022, U.S. consumer prices steadily declined each month until this past June when the inflation rate hit a low of 3%. However, inflation has since rebounded, reaching 3.7% in August. Meanwhile, the core inflation rate, which excludes food and energy costs, has shown a decrease, dropping from 4.7% in July to 4.3% in August. In terms of monthly changes, the Consumer Price Index (CPI) experienced its most significant increase in over a year, rising by 0.6%, with more than half of this rise attributed to higher gasoline costs. The core CPI, excluding food and energy, also saw a monthly increase of 0.3%, marking its swiftest rise since February. Notably, core services inflation, a key focus for Federal Reserve officials, rose for the second consecutive month, increasing by 0.37%, primarily driven by a surge in auto insurance prices. Producer prices also advanced in August. Despite this resurgence in inflation, analysts estimate only a 33% probability of an interest rate hike in the upcoming meetings.

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