Housing Costs Fuel Jump in Core US Inflation

The August US Consumer Price Index (CPI) report revealed an unexpected uptick in underlying inflation, primarily driven by rising shelter costs. Core CPI, which excludes food and energy, increased 0.3% from July and 3.2% year-over-year, surpassing economist expectations. Shelter prices, particularly owners’ equivalent rent, saw significant gains, contradicting predictions of a slowdown. While overall inflation eased to 2.5% annually, the persistence of housing-related inflation and increases in categories like airfares offset declines in energy and used vehicle costs. This report has implications for the Federal Reserve’s upcoming policy decision, with investors now anticipating a potential quarter-point rate cut.