🇺🇸 U.S. consumer prices rose by 0.4% month-over-month and 3.4% YoY —both exactly as expected. The core rate, excluding food and energy, stands at 2.4% YoY , marking the lowest level since March 2021.
The difference between the overall and core inflation rates is almost entirely due to energy:
- Energy: +2.1% MoM, +16.3% YoY
- Gasoline: +3.9% MoM, +27.4% YoY
- Heating oil: +10.1% MoM, +52.0% YoY
The housing costs , the largest single item, rose by only 0.3% MoM and 3.0% YoY.
What does this mean for the stock market?
The Fed will meet on September 15–16 with a target range for the federal funds rate of 3.50–3.75%. A 25-basis-point increase is currently priced in. The fact that the core rate is simultaneously at its lowest level since 2021 suggests that price pressures are currently external and not from the domestic economy. The key interest rate affects demand, not the price of oil—an increase would therefore serve only as a precaution against the energy shock spreading to the broader economy.
