US inflation rates accelerated in August, at the fastest pace since the beginning of the year. Figures reached 2.9%, the highest since January.
In response to the latest data, Wealth experts have shared their thoughts on what this could mean going forward.
Nathaniel Casey, Investment Strategist at Evelyn Partners, said:
“August’s inflation report came in slightly stronger than expected with a 0.4% month-on-month print, pushing the annual rate to 2.9%. Much of this strength came from energy, with gasoline prices rising during August. Core inflation remained unchanged at 3.1%.
We continue to see evidence of tariff impacts creeping in the inflation data, with the core goods inflation accelerating from 0.3% year-on-year in May to 1.5% year-on-year in August. Within this, the basket for Apparel (an import sensitive segment) accelerated by 0.5% month-on-month in August, its highest rate since February.
While the full impact of tariffs remains uncertain and inflation appears to be edging higher, the Federal Reserve is likely to view this as less concerning than the recent signs of softness in the labour market, as reflected in the payrolls data. Against this backdrop, we expect the Fed to resume its interest rate cutting cycle at the September Federal Open Market Committee meeting next week.”
Chris Beauchamp, Chief Market Analyst at IG, said:
“Quite how hot a CPI we would have needed today to deter a Fed move next week is now an academic question. The data is clear, a weakening picture in employment means the Fed has to push on with easing even with inflation fears still lurking. Today’s unemployment number should be the big driver, since weekly claims hit their highest level in 2 years. Perhaps Powell will be privately glad that he has such cover, since it helps allay concerns that the Fed has buckled under White House pressure.”
