The Weekly Brief
Thought of the week
Headline inflation moderated once again in the United States in August. Falling energy prices were the major driver, although food inflation remained firm at 0.8% m/m. However, markets focused on the tick up in 'stickier' core inflation, which moved up to 6.3% y/y, its first rise since March of this year. Shelter inflation, in particular, marked a new high, pushing up the core services component to 0.6% m/m. This August report was thus taken negatively as signs of decelerating price pressures in July proved short-lived. With core inflation providing little reason for the Federal Reserve to deviate from its tightening path, the risk of a continued slowdown in the US economy remains.
Tick up in US core inflation keeps pressure on the Federal Reserve
% change year on year