US Inflation Remains High Despite Lower Fuel Prices

Fast rising prices continued to trouble the US economy last month, though a drop in petrol costs provided some relief.

The annual inflation rate, the pace at which prices rise, fell to 8.3% in August, the Labor Department said.

That was down from 8.5% in July, marking a second month of decline.

But the costs of food, housing and medical care continued to surge, disappointing economists expecting more widespread easing.

Shares in the US dropped sharply following the release. The Dow Jones was down more than 2.5% in mid-morning trade, while the S&P 500 and Nasdaq fell more than 3%.

The report also renewed pressure on US President Joe Biden, whose approval ratings sank below 40% earlier this year, reflecting concerns about the rising cost of living.

While his ratings have recovered slightly in recent weeks as petrol prices have subsided, the issue remains “a huge problem” for the president and for the Democratic party more broadly, said pollster Chris Jackson.

“Americans have been telling us for months now that it’s the number one concern they have and rightly or wrongly they blame whoever’s running the country for that,” said Mr Jackson, senior vice president at the Ipsos polling firm.

The next round of national elections is scheduled for November, a contest that will determine whether Mr Biden’s Democrats maintain their slim control of Congress.

For a president with approval ratings like Mr Biden’s to see his party pick up seats in the mid-terms would be unprecedented, Mr Jackson said.

Kenny Shorne is among the many Americans to have been affected by inflation, which peaked at 9.1% in June, the fastest pace since the early 1980s.

The 23-year-old, who supports himself with construction and photography jobs, lives in New Jersey with his family to try to keep expenses down. He also recently took a break from his master’s degree programme in communications, concerned about being able to afford it as other costs climb.