In August, the Consumer Price Index (CPI) rose 0.6%, following a 0.2% rise in July (Figure 1 ). It was the biggest monthly increase in 14 months, with the recent surge in gasoline prices accounting for more than half of the rise. Excluding food and energy, the index rose 0.3%, compared to 0.2% in July.

Investors were surprised by the 0.1% month-over-month increase in the Consumer Price Index (CPI) for August. The report will likely push the Federal Reserve to persist with its aggressive campaign of interest rate increases.

COVID-19 case counts are the most important data point driving markets currently. Markets are concerned the highly transmissible delta variant will delay the economic recovery.

The Fed is holding interest rates near 0% and expects to keep rates there through 2023