US inflation slows slightly to 8.3% in August, stock futures plunge | Mint – Mint

US equity-index futures plunged as the Labor Department’s consumer price index report on Tuesday showed monthly CPI increased at an annual pace of 8.3%, more than economists’ median estimate of 8.1%, cementing bets of a large 75-basis-point rate hike from the Federal Reserve next week.

A steep decline in gasoline prices helped cool inflation, but costs for food, housing and autos continued to soar.

Though still painfully high, that was down from an 8.5% jump in July and a four-decade high of 9.1% in June. On a monthly basis, prices rose 0.1%, after a flat reading in July.

Excluding the volatile food and energy categories, so-called core prices surged 0.6% from July to August, higher than many analysts had predicted and a sign of inflation’s persistence.

This is the last major data ahead of the Fed’s 20-21 September meeting.

Slowing inflation may allow the Federal Reserve to consider easing off the brakes. The Fed has raised its benchmark short-term interest rate four times this year.

“With inflation being ‘stickier’ than expected, it is highly likely that the Fed will go for another jumbo rate hike of 75 bps in its next FOMC meeting on 21st September,” Ritika Chhabra, Economist and Quant Analyst at Prabhudas Lilladher said.

US central bank may deliver another 75 bps rate hike

Economists polled by Reuters said the US central bank will deliver another 75-basis-point interest rate hike next week and likely hold its policy rate steady for an extended period, although the rate outlook for the September meeting could change if inflation drops.

Money markets now see a 79% chance of a 75-basis-point increase in rates and 21% chance of a whopping 100 bps hike by the Fed at its meeting next week.

At 8:36 am ET, Dow e-minis were down 332 points, or 1.03%, S&P 500 e-minis were down 59.75 points, or 1.45%, and Nasdaq 100 e-minis were down 265.5 points, or 2.08%.

The dollar, which has risen sharply this year in part due to expectations of aggressive rate hikes by the Fed, erased losses to turn positive.

Mega-cap technology stocks including Apple Inc and Microsoft Corp fell about 2% each, while Tesla, Alphabet, and Meta Platforms dropped between 2.5% and 3.2% as Treasury yields moved higher.

On Monday, the S&P 500 index rose 1.1%. The Dow gained 0.7% and the Nasdaq composite rallied 1.3%.

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