U.S. consumer prices rose at a faster than expected pace in August.
The consumer price index rose 0.4 percent compared with the previous month, the Department of Labor said Thursday. Economists had forecast a 0.3 percent increase following a 0.2 percent increase in July.
Compared with a year ago, the consumer price index, the government’s main inflation indicator, rose 2.9 percent, matching the consensus forecast.
Core prices, which exclude volatile food and energy categories, rose 0.3 percent. That also matched the consensus forecast. In July, core CPI rose 0.3 percent. Compared with a year ago, core CPI rose 3.1 percent, also matching expectations for a rise of 3.1 percent.
Core services and core goods prices rose 0.3 percent.
Food prices climbed 0.5 percent in August, with grocery prices rising 0.6 percent and restaurant prices climbing 0.3 percent.
On Wednesday, the Bureau of Labor Statistics said that the producer price index declined by 0.1 percent in August, defying expectations for a 0.3 percent increase. Core PPI, which excludes food and energy prices, also rose 0.3 percent. Services prices fell for the month while goods prices inched up.
A measure of producer prices based on retail and wholesale margins, called trade services, declined sharply in the month, suggesting that businesses are not passing on increased costs from tariffs to consumers. Instead, businesses appear to be absorbing those costs.
The consumer price index measures prices paid by consumers. It includes sales taxes and imports but excludes exports, while the producer price index includes exports but not imports or sales taxes. The producer price index also measures prices paid by governments, businesses, and nonprofits, while the consumer price index counts only prices paid by households.
The Federal Reserve is widely expected to cut interest rates when its Federal Open Market Committee meets next week. The Fed has held interest rates steady throughout the year despite a softening labor market and low inflation, prompting sharp criticism from President Trump and many economists who see the Fed as once again failing to keep up with developments. This week, the Bureau of Labor Statistics released a preliminary estimate of revised jobs numbers, indicating that the economy added 911,000 fewer jobs in the 12 months through March 2025 than previous data had indicated.
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