SEPTEMBER 18, 2023 – INFLATION IS UP FOR AUGUST; FED MEET THIS WEEK
The CPI rose at the greatest pace in more than a year in August with a 0.6 percent increase from July. More than half the increase was due to a rise in gasoline prices. Core inflation, excluding food and energy prices, was up 0.3 percent. On annual basis, prices were up 3.7 percent in August versus 3.2 percent in July. Core inflation dropped a bit to 4.3 percent in August from 4.7 percent in July.
The relatively low core inflation will likely keep the Fed on track from raising rates later this week, but the question remains whether they will raise rates once more in 2023 to slow the economy and keep inflation in check.
Last week the European Central Bank raised interest rates by 0.25 percent to a record high of 4 percent. The action was taken to try and bring inflation in the eurozone down to their 2 percent target. Further rate hikes are not off the table if future data warrants the need. Rates in the eurozone are lower than those in the US, but inflation is higher and growth slower.