Inflation rose faster than expected in August, keeping prices painfully high

Inflation rose more than expected in August, squeezing U.S. households even as the cost of gasoline fell and continuing to create a political headache for President Biden. 

The Labor Department said Tuesday that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries and rents, rose 8.3% in August from a year ago. Prices climbed 0.1% in the one-month period from July.

Those figures were both higher than the 8.1% headline figure and 0.1% monthly decline forecast by Refinitiv economists, a worrisome sign for the Federal Reserve as it seeks to cool price gains and tame consumer demand with an aggressive interest rate hike campaign. Stock futures tanked on the surprisingly hot report, with the Dow Jones Industrial Average down more than 400 points. 

So-called core prices, which strip out the more volatile measurements of food and energy, climbed 6.3% from the previous year, above the 6.1% forecast from economists. Core prices also rose more than expected on a monthly basis, jumping 0.6% in August – a bigger increase than in April, May, June and July, and a troubling sign that underlying inflationary pressures in the economy remain strong.