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In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
Consumer prices in the US rose more than expected last month in a sign that the inflation fight in the world's largest economy is far from over.
Inflation in the US is being closely watched as the US central bank's efforts to tame the problem push up the dollar and global borrowing costs.
The rate is well above the central bank's 2% target and means the Federal Reserve is likely to continue to keep raising interest rates in an attempt to combat the rising prices.
Inflation in the US has dropped back since hitting 9.1% in June, helped by a fall in fuel prices at the pump. This was also supported by costs for clothing and used cars dipping over the last month.
But the issue continues to affect other parts of the economy. Grocery prices have jumped 13% over the past 12 months, and housing and medical costs are also rising sharply.
Excluding food and energy, inflation has jumped by 6.6% - the fastest rate since 1982.
The Federal Reserve has already raised interest rates five times since March, opting for unusually large hikes in recent months that have unsettled financial markets and led to sharp slowdowns in sectors like housing.
By making borrowing more expensive, the Federal Reserve is hoping to reduce demand, especially for big ticket items such as cars and homes, and ease the pressures that are pushing up prices further.
But by slowing activity, this also risks tipping the economy into a recession. Analysts see that outcome as increasingly likely, since inflation has proven stubbornly resistant to the efforts introduced so far.
With midterm elections looming in November, President Joe Biden has tried to make the case that the slowdown in economic activity is a healthy shift from the growth surge that followed the pandemic, pointing to robust job creation and low unemployment.
