U.S. consumer prices expected to rise in August as gasoline costs rebound

U.S. consumer prices are likely to have risen in August, with a 0.4% month-on-month gain expected after a 0.1% increase in July, according to a Reuters poll of economists. The uptick is attributed mainly to a rebound in gasoline prices, which averaged $4.192 per gallon in August, up from $4.064 in July, as oil prices moved above $100 a barrel.

The overall year-on-year CPI is forecast to have risen 3.4%, matching July’s gain. Core CPI, which excludes food and energy, is projected to have increased 0.2% for the month and 2.4% over the past year, reflecting modest moderation in rents, apparel and vehicle prices.

Economists noted that persistent factors such as ongoing energy price pressures and tariffs on imports, including recent measures against Canada, could keep inflation elevated. "What were thought to be temporary factors keeping inflation high now look to be persistent. The war-induced energy shock is now in its seventh month with no end in sight," said Joe Brusuelas, chief economist at RSM. He added that the impact of tariffs appears more enduring than initially expected.

Financial markets are pricing in roughly a 70% chance of a 25-basis-point rate increase at the Federal Reserve’s September policy meeting, with the benchmark rate currently in a 3.50%-3.75% range. John Ryding, chief economic advisor at Brean Capital, said a rate hike would signal the Fed’s independence, even without the August inflation data.

The August Personal Consumption Expenditures price index, which the Fed monitors for its 2% target, is expected to show a modest rise, though methodological changes could slightly lower the core figure.