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Inflation could be making a comeback

Data: St. Louis Federal Reserve; Chart: Axios Visuals

Thursday's U.S. core CPI reading, which measures inflation excluding volatile food and energy items, rose 0.3% in August from July and 2.4% from a year earlier. That was the fastest year-over-year increase since October 2008, according to data from the St. Louis Fed's FRED system.

Why it matters: The costs of the U.S. tariffs on Chinese imports clearly made an impact on the reading, but wages also picked up notably last month as seen in the government's jobs report. The reading may indicate that inflation is making a sustained comeback.

The big picture: While it's not the Fed's preferred measure of inflation (the central bank is partial to the personal consumption expenditures index), the reading breaking above trend will likely motivate the central bank's hawks to dig in their heels in opposing rate cuts this month.

  • It also could make further cuts more difficult, and this could be a problem as the market shows investors already have factored significantly lower U.S. interest rates into asset prices.

Go deeper: Why the Fed wants higher inflation

Inflation