US CPI up 0.4% in August, clouds Fed rate-cut prospects

U.S. consumer prices rose more than economists expected in August, complicating the Federal Reserve's decision on interest rates ahead of next week’s closely watched policy meeting. The Labor Department's Bureau of Labor Statistics said Thursday that the Consumer Price Index climbed 0.4 percent from July and was up 2.9 percent from a year earlier, a monthly pickup that matched some forecasts but removed any chance of a larger, 50 basis point cut at the Fed's September meeting.

Core inflation, which excludes volatile food and energy components, rose 0.3 percent month over month and 3.1 percent year over year, in line with consensus estimates, the BLS said. Shelter costs were the largest contributor to the monthly increase, rising 0.4 percent, while food prices rose 0.5 percent and energy gained 0.7 percent, led by a 1.9 percent uptick in gasoline. Airfares and vehicle prices also accelerated in August.

The report produced mixed signals about the impact of recent U.S. tariffs. Some economists and market commentators linked higher prices in particular categories to trade policy, while other measures suggested limited broad passthrough. Goods categories sensitive to imports showed...