Gasoline prices pushed up US inflation
Did this week bring good or bad news on the US inflation front? It depends how you slice it. The consumer price index (CPI) rose 0.6% from July to August, the largest gain since June 2022. In the 12 months to August, it rose 3.7%. That’s a tick higher than the 12 months to July, during which the CPI rose 3.2%. Excluding energy and food, the CPI rose 4.3% in August year-on-year.
Driving inflation high gasoline prices, which surged 10.6% following July’s 0.2% increase. But underlying trends suggest inflation is easing: rents increases are slowing, and both new and used car prices are moderating.
US CPI, year-on-year change, 2010 to 2023
Source: Bureau of Labor Statistics
Washington and Hanoi are strengthening their ties
The US and Vietnam have upgraded their diplomatic relations, boosting the designation to Hanoi’s highest level for foreign partners. The move comes as Washington seeks to build stronger alliances in Asia Pacific in the face of an increasingly aggressive China.
There’s a lot for the two countries to work on. Vietnam presents a viable option for moving more of US manufacturing away from China. American semiconductor firms are also eyeing the Southeast Asian country as a hub for certain segments of chipmaking. Meanwhile, Boeing and Vietnam Air just inked a 7.8 billion USD deal for 50 737 Max jets from the American airplane maker.
A historic strike in Detroit
Some 13,000 US auto workers walked off the job on Friday after contract negotiations with Ford, General Motors, and Stellantis fell apart. It’s the first time in the United Auto Workers union’s history that it has targeted all three Detroit automakers simultaneously. The stakes are high: a 10-day strike could cost 5 billion USD in losses, according to one estimate. And a prolonged disruption to production could bring surging car prices, undermining the Fed’s inflation fight.