U.S. gasoline prices rose 3.9% in August as inflation accelerated
Gas prices helped push U.S. inflation higher in August, with gasoline accounting for more than one-third of the month’s overall increase. The latest reporting shows stronger pressure for a Federal Reserve rate hike, but does not establish that the central bank has made that decision. CNBC
U.S. gasoline prices rose 3.9% in August as inflation accelerated
The U.S. consumer price index increased 0.4% from July to August and was 3.4% higher than a year earlier, according to data reported by the Bureau of Labor Statistics. Gasoline prices rose 3.9% during the month, while the broader energy index increased 2.1%. CNBC
On an annual basis, gasoline was up 27.4%, while the overall energy index increased 16.3%. Fuel oil rose 52% from a year earlier. CNBC
The reports attributed the energy-price pressure to renewed conflict and supply concerns involving the Middle East. One account also cited the effects of the Russia-Ukraine war on energy supplies. Those reports do not establish a single cause for the monthly increase. PBS News Financial Post
Why the inflation report increased rate-hike expectations
Prices excluding food and energy, known as core consumer prices, rose 0.3% in August. The annual core inflation rate was 2.4%. The monthly increase was higher than the 0.2% gain forecast in a Bloomberg survey, according to the Financial Post. Financial Post
Other categories also contributed to the increase. Shelter costs rose 0.3% in August, transportation services increased 0.5%, used cars and trucks rose 0.4%, and new vehicle prices increased 0.3%. Food prices edged up 0.1%, while food-at-home prices were unchanged. CNBC
Higher fuel costs can also raise transportation and delivery expenses. The PBS report said diesel prices had reached record highs above US$6 per gallon, increasing the cost of shipping groceries and other goods by truck. It also reported that airline tickets rose 2.7% in August and were more than 23% higher than a year earlier. PBS News
What happens next
The inflation figures were the final major indicator available to the Federal Reserve before its policy meeting the following week, according to CNBC. Traders increased their expectations of a quarter-percentage-point rate increase, with the probability rising to nearly 90% in the market measure cited by the network. CNBC
The Financial Post similarly reported that futures markets treated a rate hike as highly likely after the data. However, the available reporting does not establish that the Federal Reserve had raised rates by Sept. 11. The verified position at that point was an increase in market expectations ahead of the upcoming decision. Financial Post