United States consumer prices jumped in August, marking the largest monthly increase in four months, in advance of the Federal Reserve’s policy meeting as expectations for an interest rate hike continue to rise. Consumer prices rose 0.4 percent last month, following a 0.1 percent increase the month before, according to the US Department of Labor’s Consumer Price Index (CPI) report released on Friday. On an annual basis, prices rose 3.4 percent, matching the increase recorded in July.
The increase was driven by petrol prices, which have continued to climb as tensions between Iran and the US have escalated, and bottlenecks in the Strait of Hormuz, where roughly one-fifth of the world’s oil passes through, have persisted. Petrol prices jumped 3.9 percent month-to-month and were 27.4 percent higher than a year ago. The increase in petrol prices alone accounted for one-third of the overall monthly increase in prices.
Over the past week, the national average price for petrol jumped 15 cents, from $4.15 per gallon ($1.11 per litre) last Friday to $4.30 ($1.14 per litre) now, according to the American Automobile Association (AAA), which tracks daily petrol prices. The increase comes amid a surge in crude oil prices, which crossed the $100-per-barrel mark this week for the first time since July. Brent crude, the global benchmark, hit $100 per barrel on Wednesday and climbed as high as $109 on Thursday before dipping on Friday, hovering around $104.8.
At grocery stores, food prices increased 0.1 percent on a monthly basis, matching the increase in July. Prices rose for eggs, which increased by 2.9 percent, frozen fish, up 1.7 percent, peanut butter, up 1.1 percent, and salad dressing, up 5 percent. Those increases were offset by declines in other food categories.
The price of lettuce fell by 6.2 percent, while apples declined by 2.8 percent. Condiments such as “sauces and gravies” fell by 0.8 percent, as did milk, which declined by 1.2 percent. Meanwhile, the price of beverages like juice fell by 0.8 percent and coffee by 0.6 percent.
The CPI report comes before the Federal Reserve’s two-day policy meeting, which will include a decision on interest rates. It will be the second-to-last meeting before the midterm elections, which are on November 3. CME Group’s FedWatch tool, which tracks the likelihood of different monetary policy decisions, forecasts an 86.7 percent chance that rates will increase to a range of 3.75 percent to 4 percent, up from the current 3.5 percent to 3.75 percent range.
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