On an annual basis, U.S. inflation eased slightly to 8.3% in August, a small decrease from its 8.5% increase in July. Prices rose 0.1% from July to August, an indicator that inflation is still progressing despite efforts from the Federal Reserve Bank to subdue it.
The annual change in prices remained high for many essential goods and services such as food, shelter and medical care. However, airfare, gasoline and used vehicles became less expensive, offsetting otherwise escalating prices.
The NASDAQ, S&P 500 and Dow Jones Industrial Average all fell to intraday lows at least 4.2% below their Monday close as markets responded negatively to the inflation reading.
The consumer price index released Tuesday shows that gasoline prices dropped by 10.6% from July to August, but increases in the cost of electricity and natural gas offset this, leaving overall energy index prices decreased by only 5%.
The total food index rose 0.8% from July to August, and the index for all items excluding food and energy increased 0.6% in that span, surpassing the increase measured from June to July.
The consumer price index measures the change in prices paid by consumers for a basket of goods.
The Fed aims to maintain an annual rate of inflation around 2%, a goal that officials estimate could take two years to attain.
With the central bank’s committee that sets interest rates scheduled to meet next week, Fed Chairman Jerome Powell has already indicated that another rate hike is planned to combat rising prices. Economists estimate that the committee will raise rates by 0.75% for the third time this year.
Powell has indicated that the Federal Reserve needs to see several consecutive months of decreased inflation before it halts the interest rate increases.
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