- The Consumer Price Index rose 5.3% on an annual basis in August
- U.S. retail sales rose 0.7% in August over the prior month
- The cost of a shipping a 40-foot container vessel has increased more than 400% over the past 12 months
Top Three Market Headlines
Consumer Inflation Decelerates for the Second Straight Month: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) rose 0.3% in August from the prior month, the lowest monthly rate since January. Meanwhile, the "core" CPI, which excludes the volatile food and energy categories, rose only 0.1% on the month. Both rates have decelerated from recent highs of 0.9% in June. Indexes remained elevated compared to a year ago, however; the CPI increased at a 5.3% annual pace while the core rate rose 4.0%. The deceleration of price increases in August was partly attributed to easing prices for autos, hotel rates, and airline fares.
Retail Sales Surprise in August: Sales at retail establishments rose in August, according to the U.S. Department of Commerce. Data showed that sales at online retailers, restaurants, and brick-and-mortar stores increased 0.7% from the prior month, partly offsetting a sharp 1.8% decline in July. The largest gain in August was registered by internet retailers, while the biggest drop came from auto sales as automakers struggle to keep pace with demand due to the global shortage of microchips. Overall, the positive result was a surprise to economists and analysts, who had predicted a widespread drop in sales.
Supply Chain Woes Drive Soaring Shipping Costs: The on-going supply chain crunch triggered by Covid-19-related factory shutdowns has caused global shipping prices to soar, as companies seeking to restock inventories are forced into bidding wars to access space on shipping vessels. According to the Freightos Baltic Index, the cost of a transporting a 40-foot container has risen more than five-fold over the last 12 months. Some companies, including Molson Coors and Mondelez Global, have recently warned that rising transportation costs are driving higher cost inflation, and some, like Procter & Gamble and Michelin, have announced price increases this year driven partly by higher freight costs.