Gasoline likely to boost US consumer prices in August

Key Points:

• U.S. consumer prices likely accelerated in August, driven by a rebound in gasoline prices after two months of decline, supporting expectations that the Federal Reserve may raise interest rates next week.
• The Consumer Price Index (CPI) is predicted to have risen 0.4% in August, with year-on-year inflation steady at 3.4%, while core CPI, excluding food and energy, is expected to have increased 0.2%, reflecting moderation in rents and apparel prices.
• Rising oil prices above $100 per barrel and ongoing tariffs, particularly on imports from Canada, are contributing to persistent inflation pressures, challenging earlier views that these factors were temporary.
• Financial markets currently price in about a 70% chance of a 25-basis-point rate hike at the Fed's September 15-16 meeting, amid political pressure from President Trump to lower rates and concerns over the Fed's independence.
• Economists anticipate the Fed will likely proceed with a rate hike to reaffirm its commitment to controlling inflation, despite political tensions and recent robust employment data suggesting sustained inflationary pressures.