US Inflation rose 0.1% in August even with sharp drop in gas prices

• Inflation rose more than expected in August as rising shelter and food costs offset a drop in gas prices, the Bureau of Labour Statistics reported Tuesday.
• The consumer price index, which tracks a broad swath of goods and services, increased 0.1% for the month and 8.3% over the past year. Excluding volatile food and energy costs, CPI rose 0.6% from July and 6.3% from the same month in 2021.
• Economists had been expecting headline inflation to fall 0.1% and core to increase 0.3%, according to Dow Jones estimates. The respective year-over-year forecasts were for 8% and 6% gains. Energy prices fell 5% for the month, led by a 10.6% slide in the gasoline index. However, those declines were offset by increases elsewhere. The food index increased 0.8% in August and shelter costs, which make up about one-third of the weighting in the CPI, jumped 0.7% and are up 6.2% from a year ago.
• Markets had been widely expecting the Fed to enact a 0.75 percentage point rate increase at its meeting next week. Following the CPI release, traders took the possibility of a half-point move completely off the table and even were pricing in a 10% chance of a full percentage point hike.

(Source: CNBC