NextFin news, The U.S. Bureau of Labor Statistics released data on Thursday, September 11, 2025, showing that inflation in the United States spiked in August, with the Consumer Price Index (CPI) rising 2.9% year-over-year and 0.4% month-over-month. This inflation increase was notably influenced by the full implementation of tariffs imposed by President Donald Trump, which raised prices on goods including household furnishings and automobiles.
The August CPI report indicated that core CPI, which excludes volatile food and energy prices, rose 3.1% annually and 0.3% monthly, consistent with July’s figures. The rise in goods prices, particularly durable goods excluding cars, increased by 0.5% in August and have grown at an annualized rate of 8.5% over the past three months, signaling the tariffs’ ongoing impact on consumer costs.
Services prices also contributed to inflation, with shelter costs rising 0.4% in August, marking the largest contributor to the overall inflation increase. Airfares similarly saw a spike during the month. However, pharmaceutical prices fell by 0.3%, as this sector remains exempt from the new tariffs.
Economists and analysts, including Preston Caldwell, senior U.S. economist at Morningstar, noted that the inflation data supports the view that inflation is reaccelerating gradually. Despite inflation remaining above the Federal Reserve’s long-term target, the deteriorating labor market has shifted the Fed’s focus, and a rate cut is widely anticipated at the Federal Reserve’s upcoming September meeting.
According to the CME FedWatch Tool, bond futures traders assign a 91% probability to a 0.25 percentage point rate cut, which would lower the federal funds rate target to between 4.00% and 4.25%. There is also a 9% chance of a larger 0.50 percentage point cut.
The inflation data and tariff effects come amid concerns about the broader U.S. economy, with rising costs in food, shelter, and energy further pressuring consumers. The Federal Reserve’s decision next week will be closely watched as it balances inflation risks against a weakening employment picture.
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