Inflation rises in August amid political tension, ahead of Fed meeting

U.S. consumer prices accelerated in August, underlining the stubbornness of inflation as the Federal Reserve heads into a key policy meeting next week — and as President Donald Trump continues to insist “we have no inflation.”

The consumer-price index rose 0.4% on a seasonally adjusted basis last month, the Bureau of Labor Statistics reported Thursday, after a 0.2% gain in July. Prices are up 2.9% from a year earlier , the fastest pace since January of this year and broadly in line with economists’ expectations . Core CPI, which excludes food and energy, climbed 0.3% in August and is running 3.1% higher than a year ago.

In all, the August CPI suggests consumers remain squeezed : a reality at odds with the administration’s message.

Shelter costs were a large factor driving the monthly gain, rising 0.4%. Food prices jumped 0.5%, with groceries up 0.6% (most noticeable in the price of fruit and meat, per the report). Energy prices rose 0.7% on the back of a 1.9% increase in gas. However, offsetting declines came from medical care, recreation, and communication.

The stickiness of core inflation in particular puts the Fed in a bind ahead of its September 16-17 meeting, taking place next Tuesday and Wednesday. The warmer CPI print makes a “bumper” cut less likely, even as Trump pressures Fed Chair Jerome Powell for faster, steeper cuts and continues to wrangle with other Fed officials. Current expectations, as measured by prediction markets, point to a widely held view that the Fed will cut rates by 25 bps next week.

Politically, the report highlights a glaring and growing vulnerability for the White House.

Polls show voters view inflation as their biggest economic concern , with Trump’s approval on the issue falling below 30% in some surveys. His repeated claims that “prices are down on just about everything” conflicts with the official data showing steady increases in the price of housing, food, gas, and other items.