US Core CPI beats forecasts in August, keeping Fed rate-cut outlook under scrutiny

US consumer prices rose at a faster pace in August, driven by higher gasoline costs and an uptick in underlying core inflation. The core Consumer Price Index, which excludes volatile food and energy costs, climbed 0.3% month-on-month, topping the 0.2% forecast compiled by Bloomberg, data from the US Bureau of Labor Statistics showed Friday (September 11). On an annual basis, core CPI moderated slightly to 2.4%, down from 2.5% in July and in line with expectations.

Headline inflation accelerated 0.4% sequentially after a 0.1% increase in July, matching consensus estimates, while the annual rate held steady at 3.4%. The primary driver was a rebound in energy costs, which rose 2.1% on the month—led by a 3.9% jump in gasoline prices that contributed more than a third of the overall monthly increase. Meanwhile, shelter costs rose 0.3%, while food prices saw modest 0.1% sequential growth.

The August inflation print marks the final major economic indicator before the Federal Open Market Committee’s September 16 policy meeting, where traders are pricing in a roughly 71% to 72% chance of a 25-basis-point hike, according to CME FedWatch data.

Fed Chairman Kevin Warsh signalled in a speech last month that inflation is still too high, which markets interpreted as keeping a September move firmly on the table. However, other policymakers, including Fed Governor Christopher Waller and New York Fed President John Williams, have suggested they would lean toward holding rates steady if price pressures continue to abate.

Ahead of the inflation print, US stock futures moved higher on Friday, September 11, morning, attempting to break a four-day losing streak as an easing in crude oil prices provided some relief. Dow Jones Industrial Average futures gained more than 250 points, or 0.6%, with S&P 500 and Nasdaq-100 futures tracking similar gains, bolstered by a more than 7% premarket jump in Oracle shares on strong cloud earnings.

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