US Consumer Prices Rise 0.4% August Amid 2.9% Annual Inflation

U.S. consumer prices rose by 0.4% in August, surpassing expectations and doubling July's 0.2% increase, with the annual inflation rate accelerating to 2.9%. Key contributors to this rise included shelter costs, energy prices—especially gasoline—and food prices, while some categories like medical care and communication saw declines. The inflation data, influenced in part by tariffs under President Donald Trump's administration, complicates the Federal Reserve's decision-making ahead of its September meeting, where a rate cut is widely anticipated despite rising inflation. Concurrently, labor market data show weakness, with the slowest job gains since the pandemic recovery and a rise in unemployment claims, creating a challenging environment for policymakers balancing inflation control and employment goals. The mixed signals from inflation and labor markets highlight the ongoing tension between the Fed's dual mandate, with some officials urging caution despite pressures to lower borrowing costs. Overall, the data suggest persistent inflationary pressures amid a softening labor market, making the Fed's upcoming rate decision particularly complex.