August CPI - Persistent Inflation Bolsters Case For a Hike

Overall, consumer prices rose 0.4% from the prior month and 3.4% year-over-year on higher energy prices.  Excluding food and energy, core prices advanced 0.3% compared to July and 2.4% on an annual basis.  Today’s report suggests inflation made little progress toward the Fed’s 2% goal last month amid ongoing pressures from the Iran war, tariffs, and ongoing investments in AI infrastructure.  Coupled with last week’s stronger-than-expected jobs report, today’s indication of persistent inflation may have tipped the scales in favor of the first rate increase in three years following next week’s Fed meeting.

• Consumer prices (CPI) increased 3.4% year-over-year.  In August, the consumer price index (CPI) increased 3.4%, unchanged from July and in line with expectations.  Energy prices have been a primary driver (+16.3%) while shelter inflation is also playing a role, with a 35% weight in the CPI basket (+3.0%).  Core CPI (excludes food and energy) increased 2.4% year-over-year, down from 2.5% in July and in line with expectations.
• Consumer prices (CPI) rose 0.4% month-over-month.  In August, consumer prices rose 0.4% month-over-month matching expectations.  Core CPI (excludes food and energy) increased 0.3% month-over-month, higher than expectations for +0.2%.