The US Bureau of Labor Statistics has released the US CPI data for August. The annual inflation rate in the US steadied at 3.4% in August 2026, the same as in July and in line with forecasts. Also, the core inflation rate in the US, which excludes food and fuel costs, eased to 2.4% in August 2026 from 2.5% the previous month.

The all items index rose 3.4 percent for the 12 months ending August as it did for the 12 months ending July. The all items less food and energy index rose 2.4 percent over the year, following a 2.5-percent increase over the 12 months ending July. The energy index increased 16.3 percent for the 12 months ending August. The food index increased 2.7 percent over the last year.

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The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent on a seasonally adjusted basis in August after rising 0.1 percent in July. The index for all items less food and energy rose 0.3 percent after increasing 0.2 percent in July.

The index for gasoline rose 3.9 percent in August, accounting for over one-third of the monthly all items increase. The index for energy increased 2.1 percent over the month. The shelter index rose 0.3 percent in August after rising 0.1 percent in July. The index for food increased 0.1 percent over the month, as the index for food away from home increased 0.3 percent.

The index for all items less food and energy rose 0.3 percent after increasing 0.2 percent in July. Indexes that increased over the month include communication, lodging away from home, airline fares, education, and used cars and trucks. Conversely, the index for medical care and the index for motor vehicle insurance were among the major indexes that decreased in August.

US Fed Rate Hike Expectations

The next FOMC meeting is on September 15-16. The rate hike expectations from the US Federal Reserve are likely to fall after August’s inflation reading. US equities will also get a boost after inflation appeared to rise as per expectations and core inflation cooled down in August.

The US jobs data had also raised the odds of a rate hike. August payrolls rose by 162,000, with July’s gain revised upward by 21,000. These strong numbers were increasing pressure on the FOMC to consider a rate hike on September 16.

Nic Puckrin, markets expert and former Goldman Sachs analyst, says, “The only thing that mattered for today’s print was the month-over-month core CPI increase – the measure that strips out volatile food and energy – and this has come in higher than the 0.2% expected.

Fed Governor Waller said his vote would be heavily influenced by this print, and analysts almost unanimously identified this number as the make-or-break level for the Fed’s decision.

Apart from the hot core inflation, today’s print doesn’t even cover the most recent oil price spike above $100. There’s little reason for the Fed to hold off on the hike next week – in fact, if it does, it may lose any credibility that Warsh has been painstakingly building since taking office.

But the Fed will be hiking into a bond market already at breaking point, with 10-year yields on the cusp of 5%. The hike preserves Warsh’s credibility, but will come at the expense of the market.”

July’s US CPI Data

The annual inflation rate in the US decreased to 3.4% in July 2026, down from 3.5% in June, continuing the trend from May’s high of 4.2%. The Consumer Price Index (CPI) rose by 0.1% monthly, recovering from June’s 0.4% decline, which was the first drop since May 2020.

Disclaimer: This article is for informational purposes only and does not constitute investment, financial, or trading advice. Markets are subject to risks; please consult a qualified financial advisor before making investment decisions.