Driven by Consumers, US Inflation Grows More Persistent
WASHINGTON — U.S. inflation is showing signs of entering a more stubborn phase that will likely require drastic action by the Federal Reserve, a shift that has panicked financial markets and heightens the risks of a recession, according to an Associated Press report.
Some of the longtime drivers of higher inflation — spiking gas prices, supply chain snarls, soaring used-car prices — are fading. Yet underlying measures of inflation are actually worsening.
The ongoing evolution of the forces behind an inflation rate that’s near a four-decade high has made it harder for the Fed to wrestle it under control. Prices are no longer rising because a few categories have skyrocketed in cost. Instead, inflation has now spread more widely through the economy, fueled by a strong job market that is boosting paychecks, forcing companies to raise prices to cover higher labor costs and giving more consumers the wherewithal to spend.
On Tuesday, the government said inflation ticked up 0.1% from July to August and 8.3% from a year ago, which was down from June’s four-decade high of 9.1%
But excluding the volatile categories of food and energy, so-called core prices jumped by an unexpectedly sharp 0.6% from July to August, after a milder 0.3% rise the previous month. The Fed monitors core prices closely, and the latest figures heightened fears of an even more aggressive Fed and sent stocks plunging, with the Dow Jones collapsing more than 1,200 points.
Read the full Associated Press report.
Source: https://rvbusiness.com/driven-by-consumers-us-inflation-grows-more-persistent/
