August Inflation Runs Hot, Melting Stocks As Bears Reemerge: What Investors Need To Know

The SPDR S&P 500 (NYSE: SPY) is moving lower Tuesday morning after the Labor Department reported an 8.3% year-over-year increase in the consumer price index for August, another sign that inflation may have peaked in June.

What Happened: According to data from the U.S. Bureau of Labor Statistics, the headline CPI rose 8.3% in August, down from 8.5% in July. The August CPI reading came in above average economist estimates of 8%. 

Core inflation, which excludes volatile food and energy prices, was up 6.3% in August, above average economist estimates for a 6.1% gain.

The Labor Department said gasoline prices fell 10.6% month-over-month in August. Energy prices were down 5% and food prices climbed 0.8%.

Why It Matters: Tuesday's CPI inflation reading comes on the heels of a strong August jobs report, showing the U.S. added 315,000 jobs last month. The U.S. unemployment rate came in at 3.7%. Wages were up 5.2% year-over-year in August, but inflation is still outpacing wage growth.

The latest CPI inflation data could act as a confirmation of recent indicators for the Fed and signal that another 0.75% rate hike is likely this month.

Tuesday's CPI print is the last major data release the Fed will have before making its next decision on rates, which is due at its upcoming meeting on Sept. 20.

"We are in this for as long as it takes to get inflation down," Fed vice chair Lael Brainard said in a statement last week. 

"Monetary policy will need to be restrictive for some time to provide confidence that inflation is moving down to target. The economic environment is highly uncertain, and the path of policy will be data dependent," Brainard added.

Worse than expected CPI Report:

USA Core CPI (MoM) for Aug 0.600% vs 0.300% Est; Prior 0.300%

Core CPI YoY For August 8.3% Vs 8.1% Expected pic.twitter.com/cVD3grIzwA

— Benzinga (@Benzinga) September 13, 2022

SPY Price Action: The SPY was down 1.45% at $404.96 at time of publication, according to Benzinga Pro.

Photo via Pixabay.