A US Federal Reserve rate hike next week now looks almost certain after August inflation data showed prices for a broad range of goods and services remained elevated, with higher tariffs and the ongoing conflict in the Middle East adding to price pressures.
The consumer price index (CPI), excluding food and energy, climbed 0.3% in August from a month earlier, compared with the 0.2% increase expected in a Bloomberg survey. On an annual basis, it advanced 2.4%.
The CPI data came after the US Producer Price Index (PPI) for August also came in hotter than expected, indicating that the prices businesses pay for goods and services before they reach consumers are continuing to rise.
Those concerns were further amplified by rising US crude oil prices, which crossed $100 a barrel, pushing the probability of a rate hike to 70% following the wholesale inflation data.
The latest consumer inflation readings and the surge in crude prices have since strengthened expectations of a rate increase. Traders were pricing in about a 90% chance of a quarter-percentage-point increase at the central bank's September 15-16 policy meeting, CNBC reported, citing CME Group's FedWatch tool.