US inflation rises in August as companies push Trump tariffs cost onto consumers | US economy
As companies continued to push the cost of tariffs to consumers, inflation slightly increased in August.
The latest update to the Consumer Price Index (CPI), which measures a goods and service basket, has shown that prices have increased by 2.9% compared to last year – the highest since January. Excluding energy and food costs, the core CPI remained constant at a rate of 3.1% after rising in July.
Despite this slight increase in inflation, Wall Street continues to optimize that the Federal Reserve will reduce interest rates at the board meeting of the Central Bank next week. The Fed is under intensive pressure to reduce Donald Trump’s rates, but seems to be guided by the fear that the US labor market is weakened.
Investors expect a quarter of points to be cut. The rates are currently in the range of 4.25% to 5.5%.
US stocks rose on Wednesday after the Producer Price Index, which follows wholesale prices. light diving After a steep increase in July, he hopes that in August, investors inflation – still rising – increased at a slower speed.
The FED refused to reduce rates throughout last year by referring to instability in the economy of federal migration and trade policies. The Central Bank is an unprecedented level since the beginning of 2021 to reduce inflation to a 2%target. Higher interest rates help to alleviate increase costs, but under the risk of slowing down other parts of the economy, including the labor market.
In his speech last month at the Fed’s Jackson Hole Symposium, President Jerome Powell said that the latest economic conditions can be “guaranteeing our policy stance” as a sign that many investors would reduce the rates of the FED.
Powell said that a slowdown in the labor market, without a clear result, attracted the attention of the FED, as Powell began to raise prices. Powell said, “The risk of disadvantages for employment has increased”.
“If these risks take place, they can do this quickly in the form of sharply higher layoffs and increasing unemployment, P said Powell.
The data published in early August drew a picture of the labor market picture, as the first business figures for May and June were revised at a total of 258,000. The White House quickly accused the Bureau of Statistics (BLS), a state institution that collects and reported employment data for gaps. However, economists pointed out that the uncertainty brought by Trump’s tariffs caused delays in the collection of survey.
Last week, BLS revised the figures since June and the number of jobs added to the economy has been negative for the first time since December 2020. The unemployment rate has increased to 4.3%, which has the highest since 2021.
The FED is planned to announce any changes in interest on September 17th.
