Key facts
- Economists expect August's consumer price index rate to remain unchanged at 3.4%.
- Average hourly earnings increased 3.1% from a year ago in August, the slowest rate since 2021.
- Energy prices remain a key category to watch in the CPI report.
- Brent crude oil prices have risen to over $100 a barrel.
- 40% of job seekers surveyed by ZipRecruiter are struggling financially.
The Bureau of Labor Statistics is scheduled to release the August consumer price index (CPI) report at 8:30 a.m. ET, which will provide insight into the current state of inflation in the United States. In July, inflation stood at 3.4% year-over-year, and economists anticipate that the August figure will remain unchanged. This persistent inflation rate is higher than the 3.1% annual increase in average hourly earnings observed in August, marking the fifth consecutive month where price growth has outpaced wage growth.
The upcoming CPI data is significant as it precedes the Federal Reserve's next policy meeting. If inflation does not show further signs of slowing, particularly in light of robust job growth and low unemployment, it could prompt the Federal Reserve to implement its first interest-rate hike since 2023. The Federal Open Market Committee opted to maintain current interest rates at their July meeting, with Fed chair Kevin Warsh stating in August that the committee was awaiting further information before making a decision on rate policy.
Market indicators, such as CME FedWatch, suggest a higher probability of a rate hike than a rate hold by the Federal Reserve in the upcoming meeting. Energy prices are expected to be a critical component of the CPI report, influenced by ongoing geopolitical tensions in Iran and disruptions in the Strait of Hormuz. Although energy prices have seen a slower year-over-year increase in recent months, they remain elevated. Brent crude oil prices have recently surpassed $100 a barrel for the first time since July.
Laura Ullrich, director of economic research in North America at the Indeed Hiring Lab, noted that wage growth has not kept pace with price increases due to a lack of job market churn. She explained that when employers are less concerned about employee retention, wage growth tends to slow. Nicole Bachaud, an economist at ZipRecruiter, highlighted that this situation places workers in a financially precarious position, with a ZipRecruiter survey indicating that 40% of job seekers are experiencing financial difficulties, impacting their confidence and outlook on the job market.