Underlying US inflation rose as expected in August, keeping the Federal Reserve on track to cut interest rates next week.
The core consumer price index, excluding the often-volatile food and energy categories, increased 0.3% from July, according to Bureau of Labor Statistics data out Thursday. When incorporating those components, the overall CPI rose 0.4%, the most since the start of the year.
Goods prices, excluding food and energy commodities, accelerated. That reflected increases in new and used cars, apparel and appliances. Within services, airfares surged the most in over three years.
The report suggests inflation continues to linger. President Donald Trump’s global tariffs are impacting prices of some goods, while a resurgence in services costs may present a more persistent pressure to overall inflation.
Even so, Fed officials are widely expected to cut interest rates for the first time this year at their meeting next week after a series of weak employment data. But firm inflation, if sustained, may complicate the path for additional reductions at subsequent meetings.
Stock futures held gains and Treasuries rallied. Policymakers will see the latest data on consumer sentiment and retail sales before their Sept. 16-17 meeting. Traders expect the Fed to also cut rates two more times this year after that.
