U.S. inflation remained at 3.4% in August, and prices rose 0.4% month-on-month

The U.S. inflation rate was flat at 3.4% in August, and the Federal Reserve's interest rate hike expectations increased.

According to data from the U.S. Bureau of Labor Statistics, the consumer price index (CPI) rose 0.4% month-on-month in August, higher than the 0.1% increase in July. The data makes the Federal Reserve significantly more likely to raise interest rates again.

Since the beginning of the year, the CPI-U index has shown a significant upward trend. The increase was 0.3% in February, 0.9% in March, 0.6% in April, 0.5% in May, and then fell 0.4% in June. There was a slight increase of 0.1% in July, before jumping again in August. Despite significant monthly fluctuations, the annual inflation rate remained unchanged at the July level of 3.4%.

Meanwhile, trading data based on CME Group's FedWatch pricing showed that in early trading, the market pushed the probability of the Fed raising interest rates again to about 70%. In addition, the market expects the possibility of another rate hike in December to be close to 60%.

Wholesale price data also provides traders with reasons to be cautious. The producer price index (PPI) rose 0.4% month-on-month in August, in line with market expectations; while July data was revised to a 0.1% increase. This brought the annual PPI inflation rate to 5.4%, slightly higher than forecast. At the same time, U.S. crude oil prices broke through the US$100 per barrel mark.

Energy and food costs continue to put inflationary pressure on household spending

Energy project prices rose 2.1%, partially offsetting a 1.5% decline in the previous month. On a seasonally adjusted basis, gasoline prices rose 3.9%, accounting for one-third of the overall CPI change.

Gasoline prices rose 2.5% in August without seasonally adjustment, compared with previous monthly changes of 0.8%, 21.2%, 5.4%, 7.0%,-9.7% and-2.9% respectively. Currently, gasoline prices have increased by 27.4% year-on-year. The energy index rose 16.3%. Energy commodity prices rose 4.2% in August and have risen 28% in the past 12 months. Prior to this, the changes in this category were 1.1%, 21.3%, 5.6%, 6.7%,-9.5% and-2.9% respectively.

Fuel oil prices surged 10.1% in August and are now 52% higher than a year ago. From February to July, the monthly changes were 11.1%, 30.7%, 5.8%, 3.8%,-9.2% and-1.7% respectively.

However, energy service prices fell 0.4% in August, but are still 4% higher than last year. The previous monthly change readings were 0.2%, 0.4%, 1.6%, 0.4%,-0.7% and 0.3%, respectively.

Food costs rose 0.1% in August, 2.7% higher than a year earlier. The previous monthly changes were: 0.4% in February, 0% in March, 0.5% in April, 0.2% each in May and June, and 0.1% in July.

Housing, travel and service costs continue to push up core inflation

Core inflation excluding food and energy rose further 0.3% in August after rising 0.2% in July. The annualized growth rate slowed slightly, from 2.5% to 2.4%. Prior to August, monthly readings for core inflation were: 0.2% in February, 0.2% in March, 0.4% in April, 0.2% in May, 0.2% in June, and 0.2% in July.

Housing costs rose 0.3% in August after rising just 0.1% last month. Currently, housing costs are 3% higher than the same period last year. From February to July, monthly increases in housing costs were 0.2%, 0.3%, 0.6%, 0.3%, 0.1% and 0.1% respectively. Rents rose 0.2% in August, and homeowners 'equivalent rent rose by the same amount.

Hotel and other short-term accommodation costs became 2.4% more expensive in August after falling 2.8% in July. Communications costs climbed 2.3%, compared with just 0.6% a month ago. Airfare prices rose 2.7%, and education prices rose 0.8%.

Car prices have also risen. Used car and truck prices rose 0.4%, in line with the July increase, although prices were still lower than 2.3% in the same period last year. Previous monthly readings were: February-0.4%, March-0.4%, April 0%, May 0.1%, June-0.2%.

Without seasonal adjustment, the main CPI-U index is 334.980 (based on 1982-84). Before taking into account seasonal factors, the index increased 0.3% in August.

The CPI-W index, which tracks prices paid by urban wage earners and civil servants, reached 328.481. Before seasonally adjusted, the index rose 0.4% in August, 3.5% higher than a year earlier.

Chain C-CPI-U rose 3.3% year-on-year, and on an unadjusted basis, it rose 0.3% in August. Data for the most recent 10 to 12 months may still be revised later.