Bitcoin Falls as 8.3% U.S. Inflation Exceeds Expectations


The latest reading on the Consumer Price Index was 20 basis points lower than last month’s reading of 8.5%, but above estimates of a decline to 8.1%.

The latest Consumer Price Index data was released by the Bureau of Labor Statistics on Tuesday, revealing that the price of products grew 8.3% annually in August.

The 8.3% number exceeds the 8.1% drop that economists had anticipated. It is a 20 basis point decrease compared to July’s data. The CPI increased 0.1% month-over-month. According to the survey, the largest contributions to the overall price rise were the growing expenses of housing, food, and medical care. Meanwhile, gasoline costs declined.

The markets responded to the report with customary hysteria. S&P500, Dow Jones, and Nasdaq futures all declined before the opening of the U.S. market. Bitcoin also had a strong dip in reaction to the article, falling 3.3% to about $21,604 at the time of publication. Ethereum was worse impacted, falling 5.8% to almost $1,643. The sell-offs are probably a consequence of the print exceeding forecasts by 40 basis points.

This year, inflation has been a big issue for people in the United States and throughout the globe, as governments struggle with increasing costs. One of the major contributing factors has been the rise in energy prices, which is partially attributable to Russia’s invasion of Ukraine (as many countries have sanctioned Russia over the conflict, President Putin has leveraged the country’s rich energy supplies against the West, leaving Europe on the verge of its worst energy crisis in decades).

In an effort to combat inflation, central banks throughout the globe have increased interest rates in response to the rising cost of products. The Federal Reserve’s announcement that it will adopt a hawkish posture in late 2021 sent shivers through crypto and global markets.

Since then, the Fed has raised interest rates many times to the current range of 2.25 to 2.50 percent. The Fed has repeatedly said that it is aiming for an inflation rate of 2%, and central bank chief Jerome Powell warned of more “pain” in his address in Jackson Hole last month, which might imply that further rate rises are imminent. At next week’s FOMC meeting, Powell is anticipated to announce a 75-basis-point increase.

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