Consumer prices rose 0.4% in August, pushing the annual inflation rate to 2.9%, the Bureau of Labor Statistics said on Thursday. That’s the highest annual pace since the start of 2025.
Economists polled by Dow Jones were looking for readings of 0.3% and 2.9%, respectively, CNBC reported.
Your wallet probably already knew about all this. Grocery and gas prices climbed in August despite falling in July. Food at home prices rose 0.6%, the highest monthly increase in almost three years, per CNN. Gas prices, meanwhile, jumped up 1.9%.
The core inflation reading, which removes the more volatile food and energy prices, rose 0.3% in August, putting the annual increase at 3.1%. The Federal Reserve pays close attention to core inflation, and the latest reading could complicate the Fed’s future decisions on rate cuts, given “stubborn inflation.”
Thus far, the Fed has held rates steady all year, moving carefully as the full impact of President Trump’s tariffs, particularly on consumer prices, remains unclear.
Taken together with recent data showing more cracks than previously known in the job market, the CPI report makes clear the tight spot many Americans find themselves in.
Also on Thursday, the Bureau of Labor Statistics reported that real hourly earnings (or earnings adjusted for inflation) increased 0.7% YoY in August. But you wouldn’t know it talking to US consumers.
“The consumer aspects of this are actually more problematic politically than the tariff aspects are right now for the administration,” Tyler Schipper, associate professor of economics and data analysis at the University of St. Thomas in St. Paul, Minnesota, told CNN. “Even if real earnings are up, consumers don’t perceive it that way, and this report indicates that things at the grocery store are still getting more expensive.”
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