US Inflation Accelerates in August, Stays Above Fed’s 2% Target

WASHINGTON, Sept. 11 - U.S. consumer prices jumped 0.4% in August from July and climbed 2.9% year-over-year, driven by higher shelter, food and energy costs, the Labor Department reported Thursday.

The increase, larger than July’s 0.2% monthly gain, underscores persistent inflation pressures ahead of next week’s Federal Reserve meeting, complicating expectations for an imminent rate cut.

Inflation Uptrend Persists

Core CPI, which excludes volatile food and energy prices, rose 0.3% in August and 3.1% over the past 12 months, matching July’s annual pace. Shelter costs led monthly gains with a 0.4% rise, while the energy index increased 0.7%, driven by a 1.9% jump in gasoline prices.

Impact on Fed Policy

Economists warn that sticky inflation may delay or temper rate reductions by the Fed, which markets currently price in for next week. “Persistent price pressures in core services and shelter could keep the Fed cautious despite recent labor market softness,” said one policy strategist.

Key Monthly Movers

Shelter: +0.4%
Food: +0.5% (home +0.6%, away +0.3%)
Energy: +0.7% (gasoline +1.9%)
Airline fares, used cars and apparel also posted notable increases
Medical care and recreation saw modest declines

Year-Over-Year Highlights

All items: +2.9% vs. +2.7% in July
Core CPI: +3.1% vs. +3.1% in July
Energy: +0.2% annually
Food: +3.2% annually

Outlook

With inflation still above the Fed’s 2% goal, policymakers face a delicate balance between tempering price growth and supporting a cooling economy. Investors will watch Friday’s producer price data for further clues on underlying price trends.