US consumer prices rose more than expected in August, while jobless claims spiked, giving the Federal Reserve mixed signals before next week’s policy meeting.
The CPI gained 0.4% on the month, the sharpest increase since January, lifting annual inflation to 2.9%. Core CPI, excluding food and energy, rose 0.3% and 3.1% year-on-year, both matching forecasts.
But weekly jobless claims surged to 263,000—the highest since 2021—well above expectations of 235,000. The jump adds to evidence of a cooling labour market after earlier job growth revisions.
Markets shrugged off the hotter inflation print, betting the Fed will press ahead with a rate cut on September 17, with traders now assigning some chance of a larger half-point move. Additional cuts in October and December are also seen as likely.
Shelter, food and energy costs drove most of the CPI increase, though services inflation has slowed from last year’s peaks. Analysts say the labour market weakness may ultimately outweigh the inflation surprise in shaping Fed policy.
