New York: Rising energy costs pushed US inflation above forecasts in August, threatening to complicate the Federal Reserve’s battle to keep prices under control.
Consumer prices rose by 3.7 per cent year on year, according to figures released by the Bureau of Labor Statistics, up from 3.2 per cent in July and beating consensus forecasts of 3.6 per cent. On a monthly basis, prices increased 0.6 per cent.
Underlying price pressures were also marginally stronger than expected over the month, but continued to decline year on year.
More than half of the monthly increase in price pressures was driven by a recent jump in petrol prices. Saudi Arabia and Russia are renewing efforts to push the price of oil towards $100 a barrel and Brent crude is already at a 10-month high at about $92.50.
The response in financial markets was subdued, with the yield on the interest rate-sensitive two-year Treasury edging flat and the S&P 500 stock index dipping 0.2 per cent.
Roosevelt Bowman, senior investment strategist at Bernstein Private Wealth Management, predicted that “the Fed will largely look through short-term energy spikes” when it comes to setting monetary policy.
But he said the central bank “will keep a sharp eye” on the potential knock-on effects if the increases continue.
