Inflation heats up in August as Trump tariffs ripple across economy
Add Axios as your preferred source to
see more of our stories on Google.
The Consumer Price Index rose in August, though a gauge that excludes food and energy held steady, the Bureau of Labor Statistics said on Thursday.
Why it matters: Overall inflation heated up for the fourth straight month as President Trump's tariffs weigh on prices, posing challenges to the Federal Reserve.
By the numbers: The overall consumer price index rose 0.4% last month, twice as much as July's increase.
- Core inflation, monitored closely by the Fed, rose 0.3% in August, matching the previous month's pace.
- In the 12 months through August, CPI increased 2.9%, picking up from the 2.7% gain in July. Core CPI held steady at 3.1%.
Zoom in: Price increases were broad last month, hitting key items that have been subject to Trump's tariffs, including apparel, autos and groceries.
- Gasoline prices rose by nearly 2% alone in August, while the shelter index rose twice as fast as the previous month.
What to watch: The data comes ahead of the Fed's policy meeting next week. Financial markets overwhelmingly expect the central bank to cut rates for the first time in a year.
- Fed governor Christopher Waller has staked out a position that tariff-related inflation pressures will be temporary.
- "Most forecasts are for 12-month inflation to continue to slowly increase for a couple more months, with monthly tariff effects dissipating by early 2026," Waller said in a speech last week.
Editor's note: This is breaking news. Please check back for updates.
