US inflation steady at 3.4% ahead of Fed policy meeting

US consumer inflation held steady in August, with the consumer price index rising 3.4% from a year earlier—unchanged from July and in line with economists' expectations. The Bureau of Labor Statistics published the report on September 11, giving Federal Reserve officials their final inflation readout before the September 15–16 policy meeting. Prices rose 0.4% from July, the fastest monthly gain in three months. Gasoline was the main driver: pump prices jumped 3.9% and accounted for more than a third of the overall increase. Energy costs more broadly rose 2.1% on the month. Core CPI, which excludes food and energy, increased 0.3% month over month. On a year-over-year basis, core inflation eased to 2.4% from 2.5% in July. Producer prices added to concerns over underlying price pressures. The producer price index released a day earlier showed wholesale prices up 0.4% on the month in August and 5.4% from a year ago. The mix of sticky consumer inflation and elevated producer prices sets a challenging backdrop for the Fed's September meeting. The central bank has kept its policy rate in a 3.50% to 3.75% range since December 2025, with investors focused on whether officials opt for another quarter-point move. Market pricing suggests they might: futures imply about a 70% probability of a 25-basis-point increase at the upcoming meeting. Inflation has now run above the Fed's 2% target for more than five consecutive years, sustained by persistently high shelter costs and recurring energy-market disruptions linked to geopolitical instability. After June's CPI printed at 3.5% and July slipped to 3.4%, August remained at 3.4%. A 25-basis-point hike would lift the policy rate to a 3.75% to 4.00% range.