Apr 12, 2025
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US inflation increased more than expected to 2.9% in August
U.S. consumer prices rose more than expected in August and the annual increase in inflation was the largest in seven months, but the data is
By Aimee Picchi
Edited By Anne Marie D. Lee
Updated on: September 11, 2025 / 9:17 AM EDT / CBS News
The Consumer Price Index rose 2.9% in August from a year earlier, matching economists' forecasts that prices would pick up slightly as President Trump's tariffs filtered through the economy.
By the numbers
The CPI was expected to rise 2.9% last month, according to economists polled by financial data firm FactSet.
The CPI, a basket of goods and services typically bought by consumers, tracks the change in prices on everyday items such as food and apparel over time. So far this year, inflation has stayed at 3% or lower, with July's CPI reading at 2.7%.
Despite that, inflation has been creeping higher in recent months, edging away from the Federal Reserve's 2% annual target. That's causing some Americans to feel more sour about the economy, with a recent CBS News poll finding that two-thirds of consumers said prices in the past few weeks have continued to rise.
What economists say
Some economists point to the Trump administration's wide-ranging tariffs as pushing prices higher. That's because U.S. businesses pay the import duties to the federal government and then pass on some of those costs to consumers in the form of costlier goods.
So far in 2025, the Federal Reserve has held off on cutting rates due to the potential for tariffs to reignite inflation. Because rate reductions make it cheaper to borrow, they can spur businesses and consumers to open their wallets, adding to inflationary pressures.
Yet with the labor market showing signs of strain, Fed Chair Jerome Powell last month signaled that the door may be open for a rate cut at the central bank's Sept. 17 meeting. Cutting rates can spur hiring by making it cheaper for businesses to borrow, and therefore easier to expand and add employees.
Under the Fed's so-called "dual mandate," the central bank is required to promote full employment while keeping inflation in check.
Despite the rise in inflation, the Fed is likely still on track for a rate cut next week, said Seema Shah, Chief Global Strategist at Principal Asset Management, noting that the weaker jobs data will likely outweigh concerns about higher prices.
"While the CPI report is a tad hotter than expected, it will not give the Fed a moment of hesitation when they announce a rate cut next week," she said in an email.
What's getting pricier
Some items getting more expensive are products that are largely imported, such as coffee, which soared 21.7% from a year ago, and furniture, which rose 4.7%. Imports are subject to U.S. tariffs based on country of origin, with the Trump administration adding new duties that start at 10% and scale higher.
"There were once again some signs of tariff effects putting upward pressure on goods prices," noted Capital Economics in a research note, pointing to higher costs for appliances and other home products.
Day-to-day costs also increased at a faster pace, with food prices rising by 3.2% from a year ago, largely driven by higher restaurant prices, the data showed.
Those pressures are being felt by many consumers, with some telling CBS News that their expenses have only increased in the past year. Some say that they're cutting back on discretionary spending to cope with a rise in household costs.
"Everything overall is more expensive — my groceries for example — and I hope for things that are on sale. I plan everything we're going to have for the week," said Kali Daugherty, 40, an executive director of a nonprofit in Milwaukee, Wisconsin.
She said she's spending about $275 to $300 every two weeks on groceries for her family, up from about $175 to $200 a year ago. "There's no wiggle room anymore," she added.
Chief Justice John Roberts questioned why Trump believed he had the authority to impose tariffs under a nearly 50-year-old law that has neve
Economists at the bank said consumers in the U.S. paid 50% to 70% of the cost of U.S. President Donald Trump's tariffs and may continue to d
Trump is lying that the economy is better when it is dramatically worse than a year ago.
Here is how out of touch Elon Musk is with your financial reality. With a net worth of more than 420 billion, it would take a person earning $500,000 per day, over 2,306 years to amass this much wealth. Go back to almost 300 years before the birth of Jesus Christ, and then start earning half a million dollars a day up until present day if you want to be on the same financial footing as Musk. He can’t begin to understand your life and financial challenges. When inflation hits triple digits, and he and his fellow oligarchs complete the dismantling of a government of the people, by the people, the billionaires will feel zero pain. Unfortunately, the rest of us will become the equivalent of slaves.
July inflation market
Am I the crazy one here? I look at the current Kalshi prices for July-CPI-inflation contracts, which are a few percent for inflation over half a percentage point, and I think, "OMG free money and lots of it". Am I crazy? Noting that measured inflation in June (by the metric they're using) was 1.3%. Are we really going to assert that so many things changed in July that the probability of inflation just continuing at the previous level, is less than ten percent? I admit that the month-to-month number is pretty volatile, but not that volatile!
These markets are also pretty thinly traded, a few hundred contracts at that few-percent level, which makes me think I'm not disagreeing with a huge crowd of sophisticated investors, I'm disagreeing with three gentlemen who maybe didn't Google inflation in June.
Anyway, at those prices, thank you I'll take the whole offer. Twenty to win a thousand looks like a no-brainer to me on this one.
Nonetheless I'm left with the question: Am I the crazy one? I'll find out on August 10th.
Beyer DT-48 Headphones, 1962
Adjusting for US Inflation, That Would Be $639.79 In 2017
Frost Free Refrigerator, 1970
$289 in 1970 would be $1815 in 2017 !!