Inflation Rise in August Shatters Hope for "Decent" Fed Rate Cut

Inflation ticked higher in August, government data showed, complicating investor hopes for a more aggressive interest-rate cut from the Federal Reserve as President Trump’s tariffs continue to feed into consumer prices, Allie Canal reported for Yahoo Finance.

The report lands as the Fed debates its next policy move.

The Bureau of Labor Statistics said the Consumer Price Index rose 2.9% year over year in August, up from July’s 2.7% increase and in line with economists’ forecasts.

On a monthly basis, prices climbed 0.4%, compared with July’s 0.2% gain and above expectations for 0.3%. The increase was driven by stubborn gasoline prices and firmer food inflation.

Core inflation, which excludes food and energy, rose 3.1% from a year earlier, unchanged from July and in line with estimates.

On a monthly basis, core prices advanced 0.3%, matching July’s pace — the strongest monthly gain in six months.

The report lands as the Fed debates its next policy move. Despite the uptick in August, markets still expect the central bank to deliver a quarter-point cut at next week’s meeting, according to the CME FedWatch tool.