Rise in U.S. Inflation Likely to Keep Fed Cautious on Pace of Rate Cuts

U.S. inflation accelerated in August at a speed that is likely to keep the Federal Reserve cautious about lowering borrowing costs too quickly once it restarts cuts as soon as next week.

The Consumer Price Index, released on Thursday by the Bureau of Labor Statistics, rose 2.9 percent compared with the same time last year, the fastest annual pace since the start of 2025.

“Core” inflation, which the central bank tracks as a gauge of underlying inflation since it strips out volatile items like energy and food prices, steadied at 3.1 percent.

The overall measure of inflation rose 0.4 percent for the month, slightly higher than economists had expected. The core measure rose 0.3 percent.