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The Consumer Price Index rose 2.9% in August from a year earlier, matching economists’ forecasts that prices would pick up slightly as President Trump’s tariffs filtered through the economy.
By the numbers
The CPI was expected to rise 2.9% last month, according to economists polled by financial data firm FactSet.
The CPI, a basket of goods and services typically bought by consumers, tracks the change in prices on everyday items such as food and apparel over time. So far this year, inflation has stayed at 3% or lower, with July’s CPI reading at 2.7%.
Despite that, inflation has been creeping higher in recent months, edging away from the Federal Reserve’s 2% annual target. That’s causing some Americans to feel more sour about the economy, with a recent CBS News poll finding that two-thirds of consumers said prices in the past few weeks have continued to rise.
What economists say
Some economists point to the Trump administration’s wide-ranging tariffs as pushing prices higher. That’s because U.S. businesses pay the import duties to the federal government and then pass on some of those costs to consumers in the form of costlier goods.
So far in 2025, the Federal Reserve has held off on cutting rates due to the potential for tariffs to reignite inflation. Because rate reductions make it cheaper to borrow, they can spur businesses and consumers to open their wallets, adding to inflationary pressures.
Yet with the labor market showing signs of strain, Fed Chair Jerome Powell last month signaled that the door may be open for a rate cut at the central bank’s Sept. 17 meeting. Cutting rates can spur hiring by making it cheaper for businesses to borrow, and therefore easier to expand and add employees.
Under the Fed’s so-called “dual mandate,” the central bank is required to promote full employment while keeping inflation in check.
“The Fed is facing a question: Does it have the credibility not only to cut its policy rate next week but also to reduce it further in the following months, to the long-run neutral rate of 3%, without stoking inflation?” said Joe Brusuelas, chief economist at RSM US, in a report before the CPI data was released Thursday.
