US inflation worsened last month, and job market slowed

"Consumer prices increased 2.9% in August from a year earlier, the Labor Department said Tuesday, up from 2.7% the previous month and the biggest increase since January. Excluding the volatile food and energy categories, core prices rose 3.1%, the same as in July. Both figures are above the Federal Reserve's 2% target. The reading is the last the Fed will receive before their two-day meeting begins Tuesday, where policymakers are widely expected to cut their short-term rate to about 4.1% from 4.3%."

"Inflation remains stubborn while the job market is weakening, diverging trends that require polar reactions from Federal Reserve policymakers to address. Hiring has slowed sharply in recent months and was lower than previously estimated last year. The unemployment rate ticked up in August to a still-low 4.3%. And weekly unemployment claims rose sharply last week, the government also reported Thursday, a sign layoffs may be picking up. The number of people seeking unemployment benefits jumped 27,000 to 263,000, the most in nearly four years."

Consumer prices rose 2.9% year-over-year in August, the largest increase since January, while core inflation excluding food and energy held at 3.1%, both exceeding the Federal Reserve's 2% target. The Fed faces a decision ahead of a widely expected rate cut from 4.3% to about 4.1% at its upcoming meeting. Simultaneous signs of a weakening labor market include a higher unemployment rate of 4.3%, slower hiring, and weekly unemployment claims jumping 27,000 to 263,000, the highest in nearly four years. Economists say rising jobless claims increase the likelihood of steady rate reductions despite mildly hotter inflation.

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