August CPI 2.9% and Core 3.1% Put the Fed in a Bind; Futures Still Favor a Cut

• This represents the highest annual inflation rate recorded since January
• Month-over-month CPI rose 0.4%, which was a sharper increase than many analysts had expected
• Markets are still largely expecting an interest rate cut from the US Federal Reserve in September, although this reading makes that decision more delicate

For August, the US Consumer Price Index (CPI) rose 2.9% year-over-year, up from 2.7% in both July and June. This represents the highest annual inflation rate recorded since January 2025.

Core CPI, which strips out food and energy, held steady at 3.1% annually, showing persistent inflationary pressure in many “nondiscretionary” areas, such as housing, used cars, and similar.

Month-over-month CPI rose 0.4%, which was a sharper increase than many analysts had expected. The primary reason for this is the higher costs for shelter and food.

Despi…

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