On Thursday, September 11, 2025, the US Bureau of Labor Statistics released the Consumer Price Index (CPI) report indicating that inflation accelerated in August, with consumer prices rising at an annual rate of 2.9%, up from 2.7% in July. The report was published in Washington, D.C., and reflects ongoing inflationary pressures in the US economy.
The increase in inflation was attributed in part to tariffs imposed on imports, which have raised prices on some goods, as well as higher costs in housing and food sectors. Economists noted that tariffs contributed modestly to the inflation uptick, but the majority of price increases were linked to other factors such as housing market dynamics and food prices.
Federal Reserve Chair Jerome Powell has previously warned that tariffs could induce price hikes, complicating the central bank's policy decisions. The Fed is scheduled to meet next week to decide on interest rates, with market expectations strongly favoring a quarter-point rate cut to support the economy amid slowing job growth and persistent inflation.
According to the CME FedWatch Tool, there is approximately a 90% probability of a 0.25 percentage point rate cut at the upcoming Federal Open Market Committee (FOMC) meeting, with a smaller chance of a larger half-point cut. The Fed faces a policy dilemma between controlling inflation and supporting employment, as recent labor market data showed a slowdown in hiring.
The August CPI report comes at a time when inflation remains above the Federal Reserve's 2% target, despite being lower than the pandemic peak. Producer prices, which reflect wholesale costs before retail, unexpectedly fell in August, suggesting some easing of inflationary pressures at earlier stages of the supply chain.
Consumers continue to feel the impact of rising prices, with many households reporting increased costs for everyday expenses such as groceries and home maintenance. The inflation report adds to economic jitters as policymakers weigh the risks of raising rates to combat inflation against the potential for triggering a recession amid a weakening labor market.
President Donald Trump has publicly urged the Federal Reserve to lower interest rates aggressively, claiming inflation is not a concern, while economists emphasize the complexity of the current economic environment shaped by tariffs and other factors.
The CPI data released on Thursday is the latest in a series of economic indicators that will influence the Federal Reserve's decision-making process at its meeting next week in Washington, D.C.
