J.P. Morgan AM: Tick up in US core inflation keeps pressure on the Federal Reserve
J.P. Morgan AM: Tick up in US core inflation keeps pressure on the Federal Reserve
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Headline inflation moderated once again in the United States in August. Falling energy prices were the major driver, although food inflation remained firm at 0.8% m/m.
However, markets focused on the tick up in 'stickier' core inflation, which moved up to 6.3% y/y, its first rise since March of this year. Shelter inflation, in particular, marked a new high, pushing up the core services component to 0.6% m/m. This August report was thus taken negatively as signs of decelerating price pressures in July proved short-lived. With core inflation providing little reason for the Federal Reserve to deviate from its tightening path, the risk of a continued slowdown in the US economy remains.