(AWP) In the US, the increase in consumer prices has slowed somewhat from a high in August. The annual inflation rate fell from 5.4% in the previous month to 5.3%, the Washington Department of Labor announced Tuesday. Economists expected this development on average.
Inflation remains well above the Fed’s 2% inflation target. However, the Fed mainly blames temporary factors for the rate hike. In July and June the rate was 5.4%. It was last at the same high level in August 2008.
Compared to the previous month, consumer prices rose 0.3% in August. Economists had expected a bit more at 0.4%.
Core inflation, excluding components that often fluctuate in prices, such as energy and food, was 4.0% compared to the same month a year earlier. Economists expected 4.2%. Compared to the previous month, the core index rose 0.1%. An increase of 0.3% was expected here.
Economist Dirk Schleinsch of Landesbank Baden-Württemberg (LBBW) described the weak rise in core consumer prices in a monthly comparison as a big surprise. “A comforting sigh of relief should be heard in the ranks of the US Federal Reserve,” the economist said. Items like airline tickets, used cars, and auto insurance are getting cheaper in a month-by-month comparison. These categories have driven up prices in the past few months.
Thomas Getzel, chief economist at VP Bank, commented, “Inflation has crossed all-time highs.” (VPBN 99.20 -2.75%). However, there will be a noticeable relaxation only at the beginning of next year. The US Federal Reserve is supposed to hold the prospect of reducing bond purchases by the end of the year. “To be on the safe side, US monetary authorities will indicate that this depends on economic developments,” Getzel said.
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