An article summarized by CNBC:
Inflation continued to rise in August, with the Consumer Price Index (CPI) increasing 0.4% for the month and 3.4% from a year earlier, both matching economists’ expectations. However, core CPI, which excludes volatile food and energy prices, rose 0.3% monthly, slightly above forecasts, while the annual core rate was 2.4%. The report was the final major inflation reading the Federal Reserve will receive before its policy meeting next week.
Energy prices were a major driver, with gasoline jumping 3.9% and the overall energy index rising 2.1% amid escalating Middle East tensions. Shelter costs also increased 0.3%, while transportation services, used cars and new vehicles all became more expensive. Food prices edged up 0.1% for the month and were 2.7% higher than a year ago, suggesting price pressures remain broad rather than being isolated to energy.
The hotter-than-expected core reading and renewed energy pressures increased expectations that the Fed could raise interest rates by 0.25 percentage point next week, with traders putting the odds at around 90%. Fed Chair Kevin Warsh has emphasized the need to bring inflation back to the Fed’s 2% target, while other officials have argued for patience. The Fed’s benchmark rate currently sits at 3.5%–3.75%, where it has remained throughout 2026.
