In August, inflation crept upward again. The measure that the Fed watches most closely rose to 2.7% year-over-year, up just a notch from July. Meanwhile, prices excluding food and energy—called “core” inflation—held steady at 2.9%. On the month, prices rose 0.3%, pointing to continuing upward pressure, especially in areas like shelter, goods, and services.
Consumers are still spending, and the crawl upward in prices indicates that inflation isn’t collapsing—it’s simmering. For the Fed, that means any decisions on cutting interest rates will have to be made carefully. A misstep either way—cut too soon or hang on too long—risks stoking inflation or weakening growth.
This isn’t a cooling trend—it’s a reminder that inflation is stubborn. Prices haven’t erupted, but they haven’t backed off much either. The next move from the Fed could determine whether this simmer turns into a flare-up—or finally begins to settle.