US core consumer prices hit one-year high

US core consumer prices hit one-year high

US core consumer inflation advanced to its highest level in more than a year, data on Thursday showed as prices were boosted by higher healthcare costs. Core consumer prices, which strip out volatile items like energy and food rose 2.4 per cent year-on-year exceeding expectations for a 2.3 per cent rise, the Bureau of Labor Statistics said. That was the highest reading since July 2018 and sees core inflation hovering around levels not seen consistently since 2008.The headline consumer price index rose 0.1 per cent in August from the previous month — when it rose by 0.3 per cent — in line with expectations. That translated to 1.7 per cent year-on-year increase for the CPI index, shy of economists for a 1.6 per cent increase, according to a Refinitiv survey. So-called shelter and medical care costs climbed but were offset by the third decline in energy prices in the past four months. The energy index fell 1.9 per cent, dragged down by gasoline costs. The Federal Reserve’s decision to lower rates by 25 basis points in July rested in part on the recognition that inflation did not seem to be an immediate threat, giving the central bank more room to act.The Fed is widely expected to deliver a 25 basis point rate cut at its meeting next week. Donald Trump has pressured the central bank to cut interest rates to zero or lower to help boost the economy and on Thursday renewed those calls following a rate cut by the European Central Bank.“The steady rate of unit labour costs growth suggests that a continued acceleration in core inflation is unlikely, and we expect it to level off over the rest of the year,” said Andrew Hunter, economist at Capital Economics. “If core inflation does continue to accelerate, however, that could clearly become a major headache for the Fed, raising the risks of an adverse reaction in the markets if officials are forced to push back against expectations of further easing.”




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