US CPI Rises 0.4% in August as Annual Inflation Holds at 3.4%

Key Facts

The US Consumer Price Index, or CPI, rose 0.4% month over month on a seasonally adjusted basis in August, accelerating from 0.1% in July, while annual headline inflation held at 3.4%, the Bureau of Labor Statistics said.

Core inflation, which excludes food and energy, slowed to 2.4% year over year from 2.5% in July. The core index nevertheless rose 0.3% during the month after a 0.2% increase, showing firmer monthly pressure even as the annual rate eased.

Energy accounted for an important part of the acceleration. The gasoline index climbed 3.9% in August and contributed more than one-third of the monthly headline increase, while the broader energy index rose 2.1%.

The shelter index increased 0.3% after a 0.1% rise in July, and the food index gained 0.1% for a second consecutive month. Among other components, the communication index rose 2.3% and airline fares increased 2.7%.

There is no mathematical conflict between a stable annual rate and a faster monthly CPI reading. The annual figure compares prices with August of the previous year and is reported without seasonal adjustment, while the monthly figure measures the change from July after seasonal adjustment; the readings therefore cover different time horizons.

Higher prices reduced wage purchasing power during the month. Real average hourly earnings fell 0.1% from July to August as nominal hourly earnings rose 0.3% against a 0.4% CPI increase. From a year earlier, real average hourly earnings declined 0.3%.

The Federal Reserve targets 2% inflation as measured by the annual change in the Personal Consumption Expenditures price index, or PCE, rather than CPI. Its next monetary policy meeting is scheduled for September 15-16, 2026, days after the August data release.