In August, U.S. consumer prices jumped 0.6 per cent, registering the fastest monthly increase in more than a year. Higher gasoline costs accounted for more than half the advance. Core prices, in contrast, rose 0.3 per cent.
The drag on spending may even be seen as a welcome development, they said, since it’s coming at a time when growth has been running stronger than the central bank had expected.Policymakers will be on high alert for a gasoline-driven rise in inflation expectations in particular as they fear that could lead to a more broad-based increase in prices.
There are even signs that consumers have become more tactical in their purchases, waiting for discounts and promotions before they buy, according to Michelle Meyer, chief U.S. economist at Mastercard Economics Institute.Article content “Energy costs are one of the big wild cards that the Fed is facing right now,” said Lindsey Piegza, chief economist at Stifel Financial Corp. “This could cause a significant reversal in headline inflation, forcing the Fed to take more aggressive action than I think investors are focusing on.”
Source: Financial Digest (financialdigest.net)
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