U.S. inflation is showing signs of entering a more stubborn phase that will likely require drastic action by the Federal Reserve, a shift that has panicked financial markets and heightens the risks of a recession
a more stubborn phase
that is boosting paychecks, forcing companies to raise prices to cover higher labor costs and giving more consumers the wherewithal to spend.from July to August and 8.3% from a year ago, which was down from June's four-decade high of 9.1% When inflation is driven mainly by demand, it can require more drastic action from the Fed than when it's driven mainly by supply shocks, such as an oil supply disruption, which can often resolve on their own.
Even though headline inflation barely rose last month, underlying inflation, which reflects broader economic trends, worsened. A measure that the Federal Reserve Bank of Cleveland uses to track median inflation, which essentially ignores categories with the biggest price swings, rose 0.7% in August. That was the biggest monthly increase since records began in 1983.
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