US CPI data throws surprise, core inflation rises more than expected

The US Bureau of Labor Statistics has released the latest CPI data for August 2024. The annual inflation rate in the US slowed for a fifth consecutive month to 2.5% in August 2024, the lowest since February 2021, from 2.9% in July, and below forecasts of 2.6%.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis, the same increase as in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased 2.5 percent before seasonal adjustment.

The all items index rose 2.5 percent for the 12 months ending August, the smallest 12-month increase since
February 2021. The all items less food and energy index rose 3.2 percent over the last 12 months. The
energy index decreased 4.0 percent for the 12 months ending August. The food index increased 2.1 percent
over the last year.

US core consumer prices, which exclude volatile items such as food and energy, rose by 0.3% from the previous in August of 2024, slightly above forecasts of a 0.2% increase, and picking up slightly from the 0.2% increase in July

The annual core consumer price inflation rate in the United States, which excludes volatile items such as food and energy, stood at an over three-year low of 3.2% in August 2024, matching July’s reading and in line with market forecasts.

The US CPI decreased to 2.9% in July, and unemployment remained steady (4.2% Vs 4.3% the previous month), prompting markets to anticipate the Fed cutting interest rates by 0.25% starting from the next FOMC meeting on September 17-18.

The surge in AI and tech stocks is boosting investor portfolios ahead of the November election, fueled by the euphoria in these stocks.

DOW 30 Index is up by 8.33% YTD and 17.79% over the last 12 months.

S&P 500 Index is up by 14.70% YTD and 21.92% over the last 12 months.

Nasdaq 100 Index is up by 10.90% YTD and 20.69% over the last 12 months.

Any decline in August’s inflation figures will be welcomed positively by the market. The market and Fed officials generally agree that inflation is trending downward and no longer threatens the central bank’s intention to begin reducing interest rates.

Due to rate cuts and upcoming US elections, September is expected to be a challenging month, particularly for tech stocks.