Lower gas costs slowed U.S. inflation for a second straight month in August, but most other prices across the economy kept rising — evidence that inflation remains a heavy burden for American households.
Consumer prices surged 8.3% last month compared with a year earlier, the government said Tuesday, down from an 8.5% increase 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.
But excluding the volatile food and energy categories, so-called core prices jumped 0.6% from July to August — up sharply from 0.3% the previous month and dashing hopes, for now, that core prices would moderate. And in the year ending in August, core prices leapt 6.3%, up from 5.9% in July.
Stock prices tumbled and bond yields rose on the worse-than-expected core figures, with many investors fearful that the Federal Reserve will turn even more aggressive in its drive to curb inflation. The Dow Jones industrial average plunged the most since June 2020, dropping 1,276.37 points, or 3.9%, to 31,104.97. The S&P 500 fell 177.72 points, or 4.3%, to 3,932.69.
Bond prices also tumbled, sending yields sharply higher, after the government reported inflation decelerated last month by less than economists forecast.