U.S. Consumer Prices Surge 0.4% in August, Annual Inflation Hits 2.9%

Lead In Washington on Thursday, the Bureau of Labor Statistics reported that U.S. consumer prices rose 0.4% in August, driving the year-over-year inflation rate to 2.9%, the fastest pace since January.

Nut Graf The stronger-than-expected CPI report underscores persistent price pressures-particularly in housing and energy-and may shape the Federal Reserve’s rate decision at its September 17 meeting.

Main Part

Shelter and Energy Drive Gains

• Shelter costs, the largest CPI component, climbed 0.4% in August, underpinning most of the monthly increase.
• Energy prices rose 0.7%, led by a 1.9% jump in gasoline costs.

Food and Core Inflation Trends

• The food index rose 0.5% overall, with food-at-home prices up 0.6% and food-away-from-home up 0.3%.
• Core CPI, which excludes volatile food and energy, increased 0.3% on the month and 3.1% over the past year.

Implications for Fed Policy Markets currently fully price in a quarter-point cut at next week’s Fed meeting, but the upside surprise in inflation may prompt officials to signal a more cautious pace of easing.

Looking Ahead Investors and policymakers will closely watch upcoming labor market data and the September 17 policy statement for clues on the Fed’s balance between taming inflation and supporting economic growth.