Prices Remain High in the US, Fuel Costs Squeeze Households

Prices in the US have increased by 3.4% over the past year up to August. The main reason for this increase has been identified as the rise in gasoline prices. According to data released by the Bureau of Labor Statistics (BLS), the inflation rate remained at the same level as in July. Expectations are growing that interest rates will be raised to control inflation ahead of the Fed's interest rate decision next week.

Along with the price increases at the fuel pump, the pressures on US households' budgets are also increasing. Notably, the average price of a gallon of diesel fuel has exceeded $6. This price increase is said to be due to the rise in global oil prices caused by the US-Iran war. The price of Brent crude oil is fluctuating above $100 following the recent conflicts.

High oil prices not only increase fuel costs but also raise the transportation costs of goods. This situation leads to rising prices for food and other essential goods, affecting overall living costs. The BLS reported that gasoline prices increased by 3.9% just last month, accounting for more than a third of overall inflation.

In the face of rising living costs, wages are not increasing at the same pace; a separate study shows that average hourly earnings fell by 0.3% last year. Expectations for interest rates to be raised are increasing, given the current inflation situation and a strong labor market. Fed Chairman Kevin Warsh remained silent about any future decisions but emphasized the importance of the goal to slow down price increases. According to CME Group data, 85% of investors predict that interest rates will be raised by a quarter point next week.

Source: BBC Business