US annual inflation rate holds steady amid higher oil prices
The annual US inflation rate, based on the Consumer Price Index (CPI), advanced 3.4% last month, according to data from the US Bureau of Labor Statistics (BLS).
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The year-on-year inflation data has remained unchanged from the 3.4% growth seen in July.
“Inflation came in close enough to expectations that nobody needed to reach for the fire alarm,” according to SPI Asset Management managing partner Stephen Innes.
Brent crude's price has remained largely elevated following the inflation data, which comes amid renewed hostilities in the Middle East.
The inflation data has “enough heat underneath the surface” to make a September interest rate hike by the US Federal Reserve (Fed) “much easier to justify,” according to Innes.
Higher interest rates in the US can dampen demand growth and make dollar-denominated commodities like oil more expensive for holders of other currencies.
On a month-on-month basis, the US inflation rate increased by 0.4% in August, higher than the 0.1% growth noted in July.
“Headline CPI rose 0.4% in August, exactly as expected, leaving the annual rate at 3.4%,” Innes added.
The month-on-month data represents a higher inflation reading since the beginning of the Middle East conflict on 28 February.
Notably, the US central bank remains focused on bringing annual inflation down to its 2% target.
By Aparupa Mazumder
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