U.S. Inflation Accelerates in August, Putting Fed in Tight Spot 

The U.S. Consumer Price Index rose 0.4% in August, ahead of the 0.3% consensus and quicker than July’s 0.2% gain, according to the Bureau of Labor Statistics. Headline CPI climbed 2.9% year-over-year, the fastest pace since early 2025 and up from the 2.7% annual rate recorded in June and July. 

Core CPI, which excludes food and energy, rose 0.3% on the month, in line with expectations, and was unchanged from July’s pace. On an annual basis, core inflation also held steady at 3.1%. 

The figures add a layer of complexity for the Federal Reserve as it prepares for next week’s policy decision. Inflation remains nearly a full percentage point above the Fed’s 2% target, even as the labor market shows signs of weakening. Markets still see a rate cut as a near certainty, but debate continues over the size and timing of further easing. Current pricing suggests as many as three quarter-point cuts by year-end, with some traders wagering on a 50-basis-point move next week.