U.S. consumer prices accelerated in August as gasoline costs rebounded after two consecutive months of declines, strengthening market expectations for a Federal Reserve rate hike next week.
The consumer price index rose 0.4% month-on-month in August, up from a 0.1% increase in July, while annual inflation held at 3.4%. Producer price data released Thursday also showed gains in several key components used to calculate PCE inflation, and a strong August employment report further lifted rate hike expectations.
Markets now estimate the probability of a Fed rate hike next week at around 90% following the CPI release.
US August CPI Rises 0.4% as Fed Rate Hike Odds Climb to 90%
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