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The latest Consumer Price Index (CPI) report indicates that consumer prices rose by 2.9% year-over-year in August, up from 2.7% in July, aligning with economist expectations. Month-over-month, prices increased by 0.4%, surpassing a projected 0.3% rise. Core CPI, excluding food and energy, recorded a 0.3% increase, marking the strongest rise in six months.
Meanwhile, the Producer Price Index (PPI) revealed a decrease in wholesale inflation, dropping 0.1% in August and showing an annual increase of 2.6%, significantly below the anticipated 3.3%. The PPI has also shown a negative trend in three of the last six months. Wholesale energy costs fell by 0.4%, indicating potential ongoing declines as seasonal demand diminishes.
The labor market is displaying signs of strain, with only 22,000 jobs added in August and unemployment claims surging by 27,000 to 263,000, marking the highest level since October 2021. Following these reports, there is a 100% chance of an interest rate cut at the upcoming Federal Open Market Committee meeting, with expectations leaning towards a 0.25% reduction.
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