The post-pandemic spike in U.S. inflation eased further last month as year-over-year price increases reached a three-year low, clearing the way for the Federal Reserve to cut interest rates next week.
Wednesday’s report from the Labor Department showed that consumer prices rose 2.5% in August from a year earlier. It was the fifth straight annual drop and the smallest such increase since February 2021. From July to August, prices rose just 0.2%.
Excluding volatile food and energy costs, so-called core prices rose 3.2% in August from 12 months earlier, the same as in July. On a month-to-month basis, core prices rose 0.3% last month, a pickup from July’s 0.2% increase. Economists closely watch core prices, which typically provide a better read of future inflation trends.
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