The United States announced on Tuesday (13) that the annual growth rate of the consumer price index (CPI) in August was 8.3%, slightly lower than the previous value of 8.5%, but higher. the market expectation of 8.1%; The CPI annual growth rate was brought back to 6.3%, slightly above market expectations of 6.1% and the previous value of 5.9% .Both inflation indicators were higher than expected, the which could allow the Federal Reserve to maintain its third consecutive rate hike of 3 yards (75 basis points).
On a monthly basis, the August CPI was brought back to 0.1%, slightly up from 0% in July, and higher than expected -0.1%; It is worth noting that the August core CPI rose to 0.6% from its previous value of 0.3%, higher than The market expected 0.3%, highlighting that inflation is still warming.
Gasoline prices continue to fall, prices for food, housing and others continue to rise
The market believes that the acceleration of US inflation in August demonstrates that the cost of living in the US remains high. Although gasoline prices continue to decline, price pressures are still at all-time highs and widespread, and it also means that the Fed has a long way to go to reach its inflation target. A long way to go.
The major energy price index fell 5% in August, the biggest drop since April 2020. Among them, the gasoline price index fell 10.6% month-on-month and fuel prices fell by 10.6% on a monthly basis. 5.9% Boosted by falling fuel prices, airline ticket prices fell 4.6% on a monthly basis.
On the other hand, the food price index rose 0.8% in August after rising 1.1% in July, driven mainly by the price of food outside of households. Year-on-year, the food price index rose 11.4% in August, the largest increase since May 1979, of which the household food index increased by 13.5%, the largest increase since March 1979.
Meanwhile, housing costs continued to rise, with the housing index up 0.7% mom in August, up from 0.5% in July. The rental index rose 0.7% in August, with the equivalent rent to owner (OER) up 0.7%. Year-on-year, the house price index rose 6.24%, a sharp rise from 5.69% in July and the highest since August 1990. Meanwhile, rental inflation has risen to an all-time high. 6.74%.
Elsewhere, the health care price index also rose in August, up 0.7% month-on-month from 0.4% in July, while the prices of new cars, insurance and auto repairs rose and the prices of used cars and trucks have extended recent declines. Additionally, wages fell relative to the cost of living for the 17th consecutive month.
The Fed’s third rate hike in September is imperative
The US CPI slowdown in August may not stop the Fed from raising interest rates by 3 yards at next week’s monetary policy meeting, and it won’t ease policy until CPI drops to the 2% target level.
Goldman Sachs trader John Flood once said, “Interestingly, when Nick Timiraos, the Wall Street Journal reporter who analyzed the Fed’s precise decision-making direction, ran an article last week, it was actually the Fed’s early announcement of September 21 monetary policy meeting The decision to raise interest rates by 3 yards.
After the data was released, CME’s FedWatch tool showed that the probability of the Fed raising interest rates by 3 yards in September rose to 82%, the probability of a 4-yard (100bp) rate hike. ) went up to 18% and the probability of a 2-yard rate hike went up to 18% (50 basis points) and the probability dropped to 0%.
Expert opinion
Bloomberg economists Anna Wong and Andrew Husby said core CPI was unexpectedly strong in August and that most people expected other prices to drop as gasoline prices fell, but that wasn’t the case after the publication of the data, suggesting that wages are now the norm. Bulge’s number one drug dealer. Rate hikes are likely to continue into the first half of 2023 as Fed officials are already very concerned about a potential wage-price spiral.
Mike Loewengart, head of model portfolios at Morgan Stanley’s Global Investment Office, said today’s CPI data clearly shows there is still a long way to go before inflation cools and the economy is expected to both on a downward trajectory and the Fed will stop Expectations of rate hikes may be premature.
Senior nationwide analyst Ben Ayers said core CPI rose again in August, undermining weaker headline inflation driven by lower gasoline costs, which should allow the Fed to safely raise rates by 3 yards. at its next meeting.
Market reaction
After the data was released, the three major US stock index futures all fell, so US stocks opened lower and lower.Industrial average of the Dow Jonesdown by more than 600 points or nearly 2%,Nasdaq Composite Indexfell by more than 350 points or nearly 3%,S&P 500 Indexfell by almost 2.3%,Semiconductor of PhiladelphiaThe index fell by nearly 4%.
WE. 10-Year Treasury Yieldrose to 3.422%,US dollar indexGo up from level 108 to 109.305,goldIt fell more than $ 20 to trade at $ 1,717 an ounce. In addition, international oil prices are also affected by fluctuations in the data.Brent crudeFutures fell 0.59%, with West German crude expiring in October down 0.27%.
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