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- Inflation cooled as expected in August.
- The consumer price index rose 2.5% in August from a year ago.
- The data comes before the Federal Reserve’s interest-rate decision next week.
Inflation slowed in August, as expected.
The consumer price index, published by the Bureau of Labor Statistics, increased 2.5% over the year from August 2023 to this past August, matching the forecast of 2.5% and below July’s 2.9% rate.
The new consumer price index data will likely factor into the Federal Open Market Committee's interest-rate call coming in a week. A rate cut is almost certain to happen this month, based on expectations from traders and economists, and the biggest questions are how large and fast cuts will be through the rest of the year.
Softening but still relatively strong labor market data will also weigh on the Fed's decision. Data from the Bureau of Labor Statistics out last Friday showed unemployment dropped from 4.3% in July to 4.2% in August, and monthly job growth has cooled during the summer.
"The question will be whether the totality of the data, the evolving outlook, and the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market," Fed Chair Jerome Powell said in a July press conference following the FOMC policy interest rate decision. "If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September."
Powell also said during that conference that "we will be data dependent but not data point dependent, so it will not be a question of responding specifically to one or two data releases."
This is a developing story. Please check back for updates.