Consumer prices rise 0.4% in August, up 3.4% over the year
In August, consumer prices increased 0.4% from July and 3.4% over the year, in line with the 3.4% annual rise in July and consistent with expectations. Core CPI, which excludes more volatile energy and food prices, rose 0.3% from July and 2.4% over the year, down slightly from the 2.5% 12-month increase the month prior.
Energy costs climbed 2.1% over the month in August, after falling 1.5% in July. Over the year, energy costs surged 16.3%, after increasing 14.4% year-over-year in July. Within the energy index, gasoline prices rose 3.9% in August and 27.4% over the year, while fuel oil prices jumped 10.1% month-over-month and 52.0% year-over-year. Meanwhile, electricity prices edged down 0.2% in August but advanced 3.8% from August 2025, while natural gas prices declined 1.1% over the month but were still up 4.4% over the year.
In August, food prices rose 0.1% over the month and 2.7% over the year, down from the 3.0% year-over-year advance in July. Prices for food at home stayed the same from July but increased 2.2% from August 2025, while prices for food away from home moved up 0.3% month-over-month and 3.4% year-over-year. Of the different food groups, beef and veal, coffee, and fish and seafood rose at the fastest pace, climbing 5.9%, 6.1% and 6.5% over the year, respectively.
The shelter index advanced 0.3% from July and 3.0% over the year, down slightly from the 3.2% annual gain in July. Meanwhile, prices for used cars and trucks increased 0.4% over the month but declined 2.3% over the year, while new vehicle prices ticked up 0.3% over the month and 0.6% from August 2025. Relatedly, prices for motor vehicle maintenance and repair jumped 1.1% month-over-month and 5.2% year-over-year.
The headline inflation rate is still well above the Federal Reserve’s target of 2.0%, with increased pressure on energy prices from the war in the Middle East, but core inflation continues to moderate. Federal Reserve officials held their interest rate target steady at their July meeting, but markets anticipate that the Federal Open Market Committee will raise its interest rate target by 25 basis points at the meeting this week as risks to the Federal Reserve’s inflation mandate remain heightened.
