August U.S. CPI Rises, Fueling Stagflation Fears; Investors Brace for Inflation Data
Key Takeaways
- August U.S. CPI rose to 2.9%, core CPI to 3.1%, prompting stagflation concerns.
- Global LNG market faces multiyear supply glut starting in 2026, potentially driving prices down.
- India's GST overhaul, with price decreases on 400 products, starts September 22.
- Turkey forecasts 3.3% growth in 2025, with 28.5% inflation in new economic program.
- U.S. ready to increase economic pressure on Russia with European allies' support.
Top Stories
August U.S. CPI rises to 2.9%, core CPI to 3.1%, prompting stagflation concerns.
The August U.S. CPI report, released on September 7, 2025, showed a 0.3% monthly rise, lifting annual inflation to 2.9% and core CPI to 3.1% year-on-year. This prompted concerns of stagflation and market expectations of a 25-basis-point Fed rate cut on September 17.
US stock investors brace for inflation data amid tariff uncertainties.
On September 6, 2025, U.S. stock investors are bracing for key inflation data amid tariff uncertainties and fluctuating government bond yields. The S&P 500 closed at a record high but faces headwinds.
Global LNG market faces multiyear supply glut starting in 2026.
The global liquefied natural gas (LNG) market is projected to face a multiyear supply glut starting in 2026, potentially driving prices to their lowest levels since the energy crisis. The International Energy Agency anticipates the largest increase in LNG production since 2019.
India: GST overhaul benefits families; equity markets rise.
On September 8, 2025, Indian equity markets opened higher, with the Sensex rising nearly 200 points, supported by optimism around GST reforms. Finance Minister Nirmala Sitharaman announced the GST overhaul, with price decreases on nearly 400 products starting September 22.
Turkey's new three-year economic program announced.
On September 8, 2025, Turkey’s Vice President Cevdet Yilmaz announced a new three-year medium-term economic program, outlining the state’s strategic roadmap for 2026‑2028. Economic growth is forecast at 3.3 % in 2025, 3.8 % in 2026 and 5 % in 2028, with inflation projected at 28.5 % for 2025 and 16 % for 2026.
US to increase economic pressure on Russia.
On September 7, 2025, U.S. Treasury Secretary Scott Bessent stated that the U.S. is ready to increase economic pressure on Russia, but only with the support of European allies. New sanctions could lead to the complete collapse of the Russian economy and force Putin to negotiate.
Auto Industry
Automakers face challenges at Munich car show.
On September 8, 2025, major automakers are showcasing their latest models at the Munich car show, facing challenges such as potential U.S. tariff hikes and increasing competition from Chinese automakers. European firms are lobbying against the EU's 2035 ban on combustion-engine cars.
Labor Crunch
US workforce short 1.2 million workers due to mass deportations.
On September 6, 2025, Patricia Lopez discussed the workforce crisis in the United States, where the American workforce is short 1.2 million workers due to mass deportations.
Market Insights
India: Balancing risk in capital markets; potential GDP shortfall.
On September 7, 2025, India is navigating economic growth by balancing risk in its capital markets, encouraging foreign investment. Chief Economic Advisor V Anantha Nageswaran discussed a potential shortfall in India's nominal GDP growth for FY26 due to benign inflation.
European stock markets outperform US markets.
As of September 7, 2025, European stock markets are significantly outperforming US markets, with the Czech Republic leading with a 53.4% gain. This surge is driven by easing monetary policy, lower interest rates, and strong corporate earnings.
Japan PM resigns, markets anticipate fiscal expansion.
On September 7, 2025, Japanese Prime Minister Shigeru Ishiba announced his resignation after two election defeats, causing market concerns. The cancellation of the LDP leadership vote opens the way for a new leadership race.
Moschip Technologies Ltd. shares hit all-time high.
On September 8, 2025, Moschip Technologies Ltd. shares hit an all-time high of Rs. 268.75, surging over 50% in a week, driven by positive sentiment around India's Semiconductor Mission 2.0.
OPEC+ agrees to voluntary oil production cut.
On September 7, 2025, OPEC+ agreed to a voluntary production cut of 137,000 barrels per day in October 2025 to stabilize the oil market. The group will continue monthly meetings, with a decision on future production levels in November 2025.
Italy: No corrective measures needed this year.
On September 7, 2025, Italy's Economy Minister Giancarlo Giorgetti announced that no corrective measures are needed this year, attributing this to a prudent approach. He also mentioned the impact of the war in Ukraine and defense spending on public accounts.
Ibex 35 rises.
The Ibex 35 started the week of September 8, 2025, with a rise of 0.27%, reaching 14,890.7 points, while investors closely follow the BBVA's OPA on Sabadell and macroeconomic data such as the increase in labor costs.
Japan's GDP grew 2.2% in Q2 2025.
In the second quarter of 2025, Japan's annualized GDP grew by 2.2%, exceeding the 1.0% forecast. The quarter-on-quarter growth was 0.5%, also higher than the 0.3% forecast.
Policy Watch
US Treasury: Tariffs not a tax on Americans; Supreme Court ruling impact.
On September 7, 2025, Treasury Secretary Scott Bessent stated tariffs are not a tax on Americans, addressing concerns about President Trump's tariffs. Bessent also mentioned the Treasury would refund about half of the tariffs if the Supreme Court rules Trump overstepped his authority.
Trump narrows Fed chair shortlist; tech CEOs pledge $600B in investments.
On September 6, 2025, President Donald Trump narrowed the shortlist for the next Federal Reserve chair to Kevin Hassett, Kevin Warsh, and Christopher Waller. The same week, tech CEOs pledged about $600 billion in U.S. investments through 2028.
Greece announces tax cuts.
On September 6, 2025, the Greek government announced a major tax cut effective January 1, 2026, benefiting the middle class and encouraging birth rates. The reform includes reductions in income tax and other benefits.
White House: Federal Reserve must be independent.
On September 7, 2025, White House National Economic Council Director Kevin Hassett stated that the Federal Reserve must be fully independent of political influence, including from President Trump.