Data on the U.S. CPI (consumer price index) just came in. The data shows that prices paid by U.S. consumers rose in August by less than the forecasted number. And this could mean one thing: the upward pressure on inflation might be starting to decline.
In August, the consumer price index, which measures a basket of common products as well as various energy goods, increased 5.3% from a year earlier and 0.3% from July, according to data released Tuesday by the Labor Department. Both totals were slightly below market expectations, sending stock futures higher. A month ago, prices rose 0.5% from June.
The CPI rose just 0.1% for the month vs. the 0.3% estimate, and 4% on the year against the expectation of 4.2%.
What’s driving up consumer prices?
Businesses have been raising prices of consumer products, buoyed by hiring difficulties, shortage of materials, and transaction bottlenecks. Price hikes associated with the economy’s reopening are beginning to become less intense.
While investor fears about inflation might have slightly calmed, a spike in inflation is poised to linger well into 2022, according to U.S. consumers surveyed by the Federal Reserve Bank of New York.
The Bank of America Fund Manager Survey for September, however, shows that a net level of consumers now expect inflation to fall over the next 12 months.
Join the ANC Trading Community & Become a Pro Trader
The new CPI data precedes the Federal Open Market Committee meeting that’ll hold next week. During the meeting, Fed officials will debate how and when to begin tapering. Fed Chair Jerome Powell hinted that the central bank could begin its bond-buying program any time this year.
Shortage of parts is strangling production, driving up input costs, and increasing prices. Both Toyota Motor and 3M Co. have downgraded their outlooks for car output, owing to semiconductor shortages.
Transportation services declined 2.3% for the month. Nestle introduced even bigger price hikes as commodity and transportation costs spiked.
What’s more, with Hurricane Ida halting operations at U.S. refineries, the supply of oil dropped, driving up prices for consumers.
