Consumer Price Index (CPI) data released yesterday revealed that inflation gained 0.1% in August and was up 8.3% year over year.
The monthly increase came as a surprise, posing gains even after declines in gas prices. Economists surveyed by Dow Jones had been expecting a decline of 0.1% for overall inflation.
Core CPI, which strips out volatile food and energy costs, rose 0.6% from July and 6.3% year over year.
The report is one of the last the Federal Reserve will see ahead of their Sept. 20-21 meeting, where the central bank is expected to deliver its third consecutive 0.75 percentage point interest rate hike to tamp down inflation.
Stocks fell sharply following the news. The Dow Jones Industrial Average slid 1,276.37 points, or 3.94%. The S&P 500 dropped 4.32% and the Nasdaq Composite sank 5.16%.
The drop erased nearly all of the recent rally for stocks, pulling the S&P 500 back toward its September 6th close of 3,908. Just five stocks in the S&P 500 finished in positive territory.
Related: Financial Planning Checklist: How to Deal With High Inflation
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