The latest inflation report just dropped

The Consumer Price Index (CPI), America’s most widely-used measure of inflation, rose 8.3% in August from the same month a year ago, the Labor Department reported yesterday. That’s down from 8.5% in July and 9.1% in June, which was the highest rate in 40 years.

On a month-to-month basis, the CPI rose 0.1% in August. Which surprised a majority of economists, who had predicted inflation would decrease by that same amount.

🧐 A deeper dive… The highest monthly price increases were seen in the food (+0.8%), medical care (+0.8%), and shelter (+0.7%) indexes – though these were mostly offset by a 10.6% decline in gas prices.

• The core CPI, which excludes often volatile energy and food prices, rose 6.3% in August compared to the previous year, up from 5.9% in both June and July. Core inflation increased 0.6% on a monthly basis, double July’s pace.

👀 Looking ahead… The Federal Reserve’s policy-making committee is expected to raise interest rates by 0.75%-1.0% when it meets next week in a bid to tame inflation.

+The market reacts: All three major US indexes decreased sharply when trading officially began this morning, exactly an hour after the CPI was released. Stocks continued to slide throughout the day, eventually submitting their worst performance since June 2020. (Dow: -3.9% | S&P: -4.3% | Nasdaq: -5.2%)