Untamed Inflation warrants rate hikes.

The Consumer Price Index for All Urban Consumers rose 0.1 percent in August on a seasonally adjusted basis. Over the last 12 months, the all-items index increased 8.3 percent before seasonal adjustment.

On a year-over-year basis, food prices went up 11.4%, energy prices by 23.8%, new vehicles by 10.1%, and transportation costs by 11.3%.

On a monthly basis, food prices increased by 0.8%, utilities by 3.5%, and shelter by 0.7%. However, energy prices in August eased by 5%.

The trend in the inflation rate is not healthy despite the increase in Fed rates. Expansionary fiscal policies, budget deficits, sole dependency on China for supplies, labor shortages, a thirty percent reduction in legal immigration for the past two years, and high transportation costs fuel the inflation fire.

To stabilize the prices Fed’s only option is an aggressive monetary policy and raising the rates in the next few months.