“Core inflation jumps 0.3% in August, driven by a 0.5% rise in shelter costs. Fed may rethink future rate cuts as inflation concerns linger.”, — write: www.fxempire.com
- Airline fares: Up 3.9%
- Motor vehicle insurance: Rose 0.6%
- Education and apparel: Both saw increases
Food and Energy Trends The food index inched up by 0.1%, with food away from home rising 0.3%. Energy prices, however, declined 0.8%, led by drops in gasoline, electricity, and natural gas prices. Over the past year, the energy index has fallen 4.0%, with gasoline prices down 10.3%.
Market Implications The higher-than-expected core inflation rate suggests persistent underlying price pressures in the economy. This data point is crucial for traders, as it may influence the Federal Reserve’s monetary policy decisions in the coming months.
Market Forecast Given the stronger-than-anticipated core inflation, we maintain a cautiously bullish outlook on the U.S. dollar in the short term. Bond yields may also see upward pressure, potentially impacting equity markets. Traders should closely monitor upcoming Federal Reserve communications for any shifts in policy stance in response to this inflation data.