Consumer Prices Edged Up Slightly in August, Inflation Remains High

(KNSI) — U.S. consumer prices edged up slightly in August, as underlying inflation remained high, possibly derailing a potential half-point interest rate cut.

The latest U.S. Consumer Price Index numbers from the Labor Department, a measure of the cost of goods and services, went up .2% last month, matching expectations. The CPI saw a year-over-year advance of 2.5%, the smallest annual increase since February 2021 and also down from July’s 2.9%.

The CPI is based on prices of food, clothing, shelter, fuels, transportation, doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living.

The CPI is what the Federal Reserve uses to measure inflation. The year-over-year core inflation rate was 3.2%, which is well above the Fed’s preferred target of 2%. August’s reading is especially critical as it is the last chance for the central bank to take the temperature of the economy ahead of its policy meeting next week. Core inflation strips out volatile components like food and gas and is followed more closely by Fed officials.

Benchmark interest rates have ranged from 5.25% to 5.5% since 2023, following a number of rate hikes.

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