Inflation picks up in August, boosting Fed rate-hike bets

U.S. consumer inflation picked up in August, lifting expectations for a Federal Reserve rate increase next week. The Consumer Price Index rose 0.4% in August after a 0.1% gain in July, according to the Labor Department’s Bureau of Labor Statistics, released September 11. On a year-over-year basis, CPI increased 3.4%, matching July. Markets priced in about a 91% probability of a Fed hike next week, up from roughly 72% on September 10, based on CME’s FedWatch. Gasoline jumped 3.9% and diesel rose 9.6%, with oil prices back above $100 per barrel and diesel at record highs. Core CPI rose 0.3% monthly, the largest gain since April, and airline fares and rents contributed.