Economists and investors are braced for aggressive Federal Reserve interest rate increases to continue beyond September after an unexpected jump in monthly inflation reignited fears over the US central bank’s grip on persistent price pressures.
US consumer price growth accelerated once again in August, defying expectations for a 0.1 per cent monthly decline, as a steep slide in energy prices failed to offset rising costs elsewhere. Meanwhile “core” inflation, which strips out volatile items such as energy and food, registered an alarming 0.6 per cent increase for the month.
“To call this a disappointment would be an understatement,” said David Rosenberg, chief economist and president of Rosenberg Research. “All we’re left with is the view that the [Federal Open Market Committee] hawks so far continue to have the story right and they are in charge.”