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Source: Newsmaker.id
US consumer inflation showed renewed pressure in August, reinforcing expectations that the Federal Reserve might raise interest rates at next week's meeting. The Consumer Price Index (CPI) rose 0.4% month-on-month, matching market forecasts and exceeding the 0.1% increase seen in the previous period. On an annual basis, headline inflation stood at 3.4%, also in line with expectations.
Market attention focused primarily on Core CPI, which excludes food and energy components. Core CPI rose 0.3% month-on-month, surpassing the 0.2% forecast. Year-on-year, Core CPI came in at 2.4%, matching the consensus. The stronger-than-expected rise in Core CPI suggests that underlying price pressures remain persistent, even though annual inflation delivered no surprises.
The rise in headline CPI was also driven by higher energy prices. Surging oil and fuel prices resulting from the conflict in the Middle East have pushed up energy costs in recent weeks, fueling concerns that inflationary pressures could persist if supply disruptions continue.
This data is crucial ahead of next week's Federal Reserve meeting. With monthly core inflation exceeding forecasts and energy prices remaining high, markets may ramp up expectations for an interest rate hike. Such a scenario could bolster the US dollar and Treasury yields while exerting downward pressure on non-yielding assets like gold.
Newsmaker Analysis : The latest CPI results lean hawkish for the Fed, particularly because the 0.3% Core CPI reading exceeded the 0.2% forecast. Although headline CPI met expectations, the surprise in core inflation indicates that price pressures have not fully subsided. If markets become increasingly convinced that the Fed will raise rates next week, the dollar and Treasury yields could strengthen, while gold faces potential downward pressure. However, gold's reaction will ultimately depend on how yields and the dollar move once the market has fully digested the inflation data. (arl)
Source: Newsmaker.id