U.S. Inflation Picked Up in August

Inflation picked up in August as gas prices jumped, but underlying price pressures stayed mostly mild.

The consumer-price index report comes a week before the Fed’s two-day policy meeting. Officials are likely to hold interest rates steady while debating whether another increase in November or December will be needed to maintain recent progress slowing inflation and economic activity.

Economists surveyed by The Wall Street Journal had estimated consumer prices rose 0.6% in August from the prior month and 3.6% from a year earlier.

But when excluding volatile food and energy items, those economists saw so-called core prices increasing 0.2% in August from the month before, the same as in June and July—a notable stretch of modest readings compared with earlier months. 

Cooling core inflation this summer sets up the Fed to hold interest rates steady next week, and the August reading will inform the central bank’s discussion about whether a rate increase will be needed later this year. The Fed has aggressively raised rates for more than a year in an effort to lower inflation by slowing the economy.