The US was surprised with ‘hotter’ inflation than expected

The US was surprised with hotter-than-expected inflation - Photo 1.

The US consumer price index (CPI) rose 0.1% in August, beating economists’ expectations for a 0.1% decline – Photo: BLOOMBERG

According to the newspaper Financial Timesthe US consumer price index (CPI) rose 0.1% in August, while economists expected a 0.1% decline.

The most worrisome for policymakers is that core inflation (excluding volatile items such as energy and food) rose 0.6 percent from July.

Compared with the same period last year, US core inflation in August increased by 6.3%, higher than the rate of 5.9% in July.

With July’s data not so ominous, Wall Street was caught off guard by hotter-than-expected August inflation figures.

According to Bloomberg News, this is the reason why many US stocks sold off the most on September 13 since mid-2020.

Closing session on September 13, the S&P 500 index fell 4.3%, the worst performance since June 2020. Nasdaq Composite fell more than 5%.

Steven Blitz, chief US economist at financial consulting firm TS Lombard, said the September 13 data combined with rising wages and a tougher labor market means the Fed “will not create fairy tales” for the US economy.

Meanwhile, Brian Coulton, chief economist at credit rating agency Fitch Ratings, said: “Hot-than-expected inflation in August is unwelcome news for President Biden, who has been seeks to defuse Republican attacks on rising prices in the November midterm elections.”

According to the newspaper New York Times, on September 13, the US president and his aides celebrated the drop in gasoline prices throughout the summer. This has somewhat helped control inflation compared to the dizzying increase at the beginning of the year, although not too much.

Even acknowledging the pain of rapid price increases across the economy, Mr. Biden has claimed America has made progress in the fight against inflation, including last month signing the Inflation Reduction Act. .

Song theo New York TimesPolls continue to show inflation is hurting efforts by Mr. Biden and Democrats to maintain control of the House and Senate.

This is considered a top issue for voters in national opinion polls. Americans say they trust Republicans to handle inflation and the economy in general more than Democrats.

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