The consumer prices in the USA rose less sharply in August than in the previous month, initially providing relief. According to the US Department of Labor, prices increased by 2.5 percent compared to the previous year – the lowest rise since February 2021. In July, the rate was still at 2.9 percent. This decline was expected by experts.

However, core inflation, which excludes the volatile prices of energy and food, remains problematic. This remained at 3.2 percent in August. Core inflation is closely monitored by the US Federal Reserve (Fed) as it better reflects the overall price trend.

The decreased overall inflation is positive at first glance, but the high core inflation clouds the picture," said Thomas Gitzel from VP Bank. "Core inflation remains high and does not significantly move away from the Fed's targets." The Fed aims for an inflation rate of two percent in the medium term.

Economists still expect that the Fed will cut interest rates at its next meeting next week. Dirk Chlench from Landesbank Baden-Württemberg anticipates a rate cut of 0.25 percentage points. Rising housing costs are the main reason for persistently high core inflation. "It remains a challenge for the Fed, since inflation has not disappeared but is concentrated in certain sectors," Chlench said.

The US Dollar gained after the release of inflation data, while the Euro exchange rate fell to a daily low of 1.1004 USD. Yields on US Treasury bonds also rose slightly, while the German stock market only reacted briefly to the news.