Falling gas prices last month delivered a second low inflation reading in a row as the consumer price index rose by just 0.1% in August. But inflation is still running near a 40-year high and is set to spur the Fed to sharply raise interest rates again.
The numbers: Falling gas price delivered a second low U.S. inflation reading in a row as the consumer price index rose by just 0.1% in August. But the report also showed inflation has spread more broadly through the economy and is set to spur the Federal Reserve to sharply raise interest rates again.
The central bank risks a U.S. recession if it goes too far, however. Higher interest rates reduce inflation by raising the cost of borrowing for consumers and businesses and thereby slowing the economy. It’s since declined to $3.69 in September, the Energy Information Administration reported, suggesting another low headline inflation reading in the next CPI report.The cost of groceries jumped again last month and they are up 11.1% in the past year — the biggest increase since 1979.
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