US core CPI rose 0.3% in August from the previous month, exceeding the 0.2% market forecast and accelerating from July’s 0.2% increase. The annual core inflation rate eased to 2.4% from 2.5%, matching expectations and reaching its lowest level since April 2021.
Headline consumer prices increased 0.4% month over month, in line with the consensus estimate but sharply above the previous 0.1% rise. Annual headline inflation remained at 3.4%, also matching expectations and unchanged from July.
US Core CPI Keeps Near-Term Fed Pressure Elevated
The composition of the report was mixed. Annual energy inflation accelerated to 16.3% from 14.7%, while food inflation slowed to 2.7% from 3.0%. Shelter inflation eased to 3.0% from 3.2%, offering some evidence that underlying housing pressure continued to moderate.
The Bureau of Labor Statistics CPI release provides the official tables and methodology behind the report. Monthly data can be volatile, so policymakers are likely to compare the figures with producer prices, wage growth and subsequent inflation readings.
Markets initially treated the stronger monthly core reading as hawkish. The dollar index moved higher, gold fell by more than $50 and short-term interest-rate futures increased the implied probability of a Federal Reserve rate increase at the following week’s meeting.
The latest US core CPI reading does not overturn the improvement in the annual measure, but it complicates the policy outlook. Persistently strong monthly inflation, particularly alongside elevated energy prices, could make the Federal Reserve more cautious about declaring that price pressures are under control.
