U.S. Consumer Price Index (August 2026)

Core inflation heats up in August, Fed likely to hike at next week's meeting 

• The Consumer Price Index (CPI) rose by 0.4% month-on-month (m/m) in August, meeting the Bloomberg consensus. On a twelve-month basis, CPI held at 3.4%.  
  
  
  • Energy costs rose by 2.1% m/m, led by a 3.9% m/m gain in gasoline prices. Food prices rose by a subdued 0.1% m/m for a second consecutive month and are up 2.7% over the last year.  
• Excluding food and energy, core prices rose 0.3% m/m, a tick hotter than expectations. On a twelve-month basis, price growth edged down to 2.4%, while the three-month annualized sits at a slightly softer 2.0%.  
• Price growth for core services rose 0.3% m/m, a modest acceleration from the month prior. The rebound was driven by a sharp acceleration in non-housing services (+0.6% m/m vs. +0.2% m/m in July), while primary shelter costs (+0.2% m/m) were a touch softer.
  
  
  • Gains in non-housing services were widespread, with notable price increases in airfares (+2.7% m/m), hotels (+2.4%), vehicle maintenance costs (+0.6% m/m) and a sharp increase in wireless phone services (+5.9% m/m).  
• Core goods rose a modest 0.1% m/m, a tick slower than the month prior.  The gain was largely driven by an increase in new and used vehicle costs – each rising 0.3% m/m – while most other categories were flat to lower.  

Key Implications

• Although headline inflation met expectations, core inflation came in slightly hotter than anticipated, ending a three-month run of softer readings. The pickup was concentrated in non-housing services, which posted its strongest monthly gain since January and is still running north of 3% on a twelve-month basis – underscoring the stickiness in this component of inflation.  
• The stronger-than-expected reading on core inflation leaves the Fed with little room to remain on the sidelines. With oil prices up significantly in recent weeks, again hovering around $100 per-barrel and underlying price pressures in services remaining sticky, a rate hike at next week’s meeting now appears all but certain. Treasury yields jumped following the release, while Fed futures are now attaching 89% odds to a September hike. 

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