US Inflation Growth Slows In August

Headline CPI (AUG)
Actual: -0.1% 2.0%
Expected: 0.0% 2.1%
Previous: 0.1% 2.4%

Core CPI (AUG)
Actual: 0.2% 2.1%
Expected: 0.2% 2.2%
Previous: 0.2% 2.2%

Inflation growth in the US was softer than expected, as the headline measure fell 0.1 percent during the month of August - the first decline since October 2006 - bringing the annualized rate down to nine-month low of 2.0 percent. Unsurprisingly, declines were led by energy prices, which fell 3.2 percent during the month, and a further breakdown shows that prices at the gas pump alone dropped 4.9 percent. Even core CPI surprisingly fell back to an annualized rate of 2.1 percent. On the other hand, food prices edged slightly higher, which could continue to be an issue in coming months. Furthermore, with oil hitting record highs above $80/bbl and August proving to be a weak month for CPI figures globally, hawks may not turn neutral quite yet, especially in light of the FOMC’s statement that they remain concerned about inflation risks.