US August CPI rose 0.4% month-on-month, in line with expectations

Financial blog Zero Hedge analyzed the US CPI report: Following the previous PPI surge driven by fuel prices, the market widely expected a significant month-on-month rise in US CPI as well. The previous month's CPI had declined, but with energy prices rebounding, the market anticipated that inflation would heat up again. However, we also previously warned that, amid the current flurry of interventionist rhetoric, if the finally published CPI data unexpectedly “cooled off” and offset the shock from PPI, we would not be surprised. The released data proved that analysts’ predictions were largely correct. In August, the US overall CPI rose 0.4% month-on-month, exactly in line with market expectations and marking the biggest month-on-month gain since May; the year-on-year increase was 3.5%, also in line with expectations and unchanged from the previous month. Core services prices accelerated, but fuel prices led the overall rise in CPI. Similar to the PPI data released yesterday, the rebound in crude oil and refined oil prices caused the energy component of the CPI to rise significantly.