In August, the rate of inflation was higher than anticipated. The Federal Reserve is expected to raise interest rates.
The year-over-year inflation rate is 8.3%, which is down from its June peak of 9.1%.
A survey of 43 economists that predicted a rate of 8% was higher than many estimates.
The rate of inflation was elevated despite a decrease in gas prices.
Mark Hamrick, Bankrate's senior economic analyst, says the report "serves up a gut punch to anyone who was hoping that inflation would come down substantially." He says the implication is that the Federal Reserve has to remain aggressive.
In July and June, food prices increased by 1% and 1%, respectively. Shelter prices increased in July. The cost of medical care increased by 0.7% in August, after increasing by 0.4% in July.
The Labor Department shows how much prices have gone up over the past year.
Expect interest rate hikes to continue.
In a recent speech, the Federal Reserve chairman stated that the central bank will keep at it until it is confident that the job is done and that it will bring some pain to businesses.
Four interest rate hikes have been implemented by the Federal Reserve in order to reduce inflation to a 2% target rate. 2.5% is the federal funds rate.
When the Federal Open Market Committee meets later in September, it is expected that another rate hike will be implemented. If the rate of inflation isn't under control, there will be more rate hikes.
The baseline conclusion for consumers and businesses is that interest rates have risen and are likely to rise even higher from here.
While inflation erodes spending power, interest rate hikes make borrowing more expensive, which can slow down economic growth and make it hard to find a job. It also means that the cost of debt will go up for people.
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