August CPI Shows Mixed Trends
Inflation in the United States rose again in August, remaining above the Federal Reserve’s 2% target as policymakers prepare to meet next week. The Bureau of Labor Statistics reported that the consumer price index (CPI) increased 0.4% month over month and 2.9% compared with a year earlier. Core prices, which exclude food and energy, rose 0.3% on the month and 3.1% year over year, aligning with forecasts.
Households Feel the Pressure
Rising costs continue to strain U.S. households, particularly those with lower incomes who spend a greater share of their budgets on essentials. Food prices advanced 0.5% in August, with meats, poultry, and fish up 1.1% and fruits and vegetables climbing 1.6%. Housing costs, a key driver of inflation, rose 0.4% in the month and 3.6% annually. Transportation prices also added pressure, increasing 1% on the month and 3.5% year over year, led by higher auto repair costs and airline fares.
Energy and Other Sectors
Energy costs climbed 0.7% in August, though they are up just 0.2% over the past year. Gasoline prices rose 1.9% during the month but remain 6.6% lower than a year ago. Electricity costs fell slightly in August but are up 6.2% annually. Apparel prices increased 0.5% in the month, while footwear fell 0.4%. Tools and hardware rose 0.8%, and furniture costs advanced 0.3%.
Implications for Fed Policy
The data arrives as the Fed considers cutting interest rates at its upcoming meeting. Chair Jerome Powell recently signaled that risks to the labor market could outweigh the dangers of persistent inflation. Analysts expect a 25-basis-point rate cut, with CME FedWatch showing a 90.8% probability of that outcome. While inflation remains elevated, experts say tariffs and sector-specific pressures are influencing prices, but not enough to derail expectations of near-term rate cuts.
