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Vegetables on display in a grocery store on August 15, 2025 in Delray Beach, Florida. <\/p>\n
Joe Raedle | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
Prices consumers pay for a variety of goods and services moved higher than expected in August while jobless claims accelerated, providing challenging economic signals for the Federal Reserve before its meeting next week.<\/p>\n
The consumer price index posted a seasonally adjusted 0.4% increase for the month, double the prior month, putting the annual inflation rate at 2.9%, up 0.2 percentage point from the prior month and the highest reading since January. Economists surveyed by Dow Jones had been looking for respective readings of 0.3% and 2.9%.<\/p>\n
For the vital core reading that excludes food and energy, the August gain was 0.3%, putting the 12-month figure at 3.1%, both as forecast. Fed officials consider core to be a better gauge of long-run trends. The central bank’s inflation target is 2%.<\/p>\n<\/div>\n
On employment, the Labor Department reported a surprise increase in weekly unemployment compensation filings to a seasonally adjusted 263,000 for the week ending Sept. 6, higher than the 235,000 estimate and up 27,000 from the prior period.<\/p>\n
The reports provide the final pieces of a complicated data puzzle that central bankers will review at their two-day policy meeting that concludes Sept. 17.<\/p>\n
The closely watched CPI reading saw its biggest gain from a 0.4% increase in shelter costs, which account for about one-third of the weighting in the index. Food prices jumped 0.5% while energy was up 0.7% as gasoline rose 1.9%.<\/p>\n<\/div>\n
Market pricing indicates a 100% certainty that the Fed will lower its benchmark interest rate, currently targeted between 4.25%-4.5%. However, there has been a slight implied chance that the Fed might choose to deviate from its usual quarter percentage point move and cut by half a point considering weakness in the labor market this year and subdued inflation readings.<\/p>\n
Fed officials have been watching the inflation data closely for clues on the impact from President Donald Trump’s tariffs. There has been some visible pass-through from the duties, though inflation figures have been relatively well-behaved. The BLS reported Wednesday that producer prices actually declined 0.1% in August.<\/p>\n
Tariff-sensitive vehicle prices saw monthly increases, with new vehicles up 0.3%. Used cars and trucks, which are generally not influenced by tariffs, rose 1%.<\/p>\n