What were the key August 2023 U.S. CPI figures reported by the Bureau of Labor Statistics, and how did they compare to expectations?

The Consumer Price Index (CPI) increased 0.4% in August after rising just 0.1% in July, and the 12-month inflation rate held steady at 3.4%. Core CPI—excluding food and energy—rose 0.3% month-on-month after a 0.2% gain in July, and its year-on-year increase slowed to 2.4% from 2.5% in July. These figures matched economists' Reuters poll forecasts exactly: a 0.4% monthly rise and a 3.4% annual increase in headline CPI.

How did the August CPI data influence market expectations for the Federal Reserve's upcoming September 15–16 policy meeting?

The August CPI report reinforced financial market expectations of a Fed rate hike, with CME's FedWatch tool pricing in a roughly 70% chance of a 25-basis-point increase at the September 15–16 meeting—up from diminished odds following Fed Governor Christopher Waller’s recent dovish comments—due to the rebound in gasoline prices, elevated diesel costs, and supportive signals from the prior week’s strong employment report and Thursday’s rising Producer Price Index.

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US Consumer Inflation Rises in August

US Consumer Inflation Rises in August

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