The consumer price index gained 0.1% last month after being unchanged in July, compared to expectations of a 0.1% dip.  Over the year, it rose 8.3%. Core CPI rose 0.6% in August after advancing 0.3% in July. It increased 6.3% in the 12 months through August after rising 5.9% in July.

Investors are now certain that a 75-basis points rate increase will be unveiled by the Fed next Wednesday, if not higher, according to CME's FedWatch Tool.

The FTSE 100 dropped 1.2% yesterday, and is down 0.7% this morning. Consumer discretionary, retail and automotive sectors are hardest hit.

Oil and mining stocks declined by 1.7% and 1.0%, respectively, today, on fears of aggressive hikes by central banks.

This is despite data showing a surprise fall in British consumer prices in August, due mainly to a fall in fuel prices. The annual rate of headline inflation decreased to 9.9% in August from 10.1% in July, compared with expectations of 10.1%. "However, the underlying picture remains mixed", say analysts at Berenberg. "Whereas measures of domestic price pressures such as core inflation and services prices worsened in August, external pressures eased somewhat amid a deceleration in annual rates of growth in goods and producer prices."

 

Things to read today:

Wall St suffers worst sell-off since 2020 after inflation data (Financial Times)

China is winning the post-Ukraine Game, at Russia’s Expense (Bloomberg)

Prepare for Russia itself to disintegrate (Daily Telegraph)