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U.S. consumers absorbed the biggest hit to inflation in 2023 last month, largely thanks to spiking prices in energy.

inflation cpi consumer prices

The U.S. Department of Labor said Wednesday that August’s consumer price index (CPI), which measures the change in prices on a variety of consumer goods and services, came in 0.6% higher month-over-month on a seasonally adjusted basis, and 3.7% year-over-year. But “core” CPI—which backs out food and energy costs, which are more volatile than the other costs tracked by the Labor Department—rose 0.3% MoM and 4.3% YoY.

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A quick look at the numbers compared to expectations from economists surveyed by Dow Jones:

  • MoM CPI: +0.6% (vs. +0.6% est.)
  • YoY CPI: +3.7% (vs. +3.6% est.)
  • MoM Core CPI: +0.3% (vs. +0.2% est.)
  • YoY Core CPI: +4.3% (vs. +4.3% est.)

Here’s what several experts have to say about August’s CPI numbers and what they mean for consumers, the Federal Reserve’s future actions, and more:

“August’s Headline Consumer Price Index moved higher from elevated energy prices, but core inflation continued the trend of consistent ~0.2-0.3% MoM price growth. We expect services inflation, especially shelter, to abate meaningfully until year end. While headline inflation remains elevated due to energy prices, the trajectory of core inflation makes it unlikely for the Fed to increase rates at the FOMC meeting next week. We believe that this is the last hike of the cycle but medium-term inflation risks support the Fed keeping rates higher for longer.”

—Gargi Chaudhuri, Head of iShares Investment Strategy, Americas

“Given the summer run-up in crude oil prices, energy was the largest incremental driver as price hikes started to make their way to the pumps. With that said, the inflation uptick was otherwise remarkably broad-based, with only used cars and trucks registering a sizable decline for the month, aside from a very modest tick lower for core goods. Energy costs are a notable input in the supply chain of various other components of the CPI, so it will be important to watch for any residual bleed through of higher fuel costs in the months to come.”

—Jason Pride, Chief of Investment Strategy & Research at Glenmede

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“The slight increase in core CPI suggests that we might not be in the clear. And if these numbers continue to grow, the Fed might reconsider its stance on interest rates. In the wake of these figures, one could reasonably anticipate the Fed leaning towards a rate hike, especially if the next report shows a similar or higher trend. Given the context, I believe that while energy prices have contributed to a surge in the headline CPI, the focus should remain on core and supercore CPI. These figures give a more unobscured view of underlying inflationary pressures. The continual increase in the shelter index and the fluctuation in transportation indexes, especially used cars, will play pivotal roles in shaping policy decisions.”

—Jon Maier, Chief Investment Officer at Global X

“These numbers confirm the trend of lower shelter costs that market bulls want to see. But they’re not decisively low enough to trigger a rally. Keep the champagne on ice and wait for next week. The Fed meeting is more important than ever. Policymakers will have to decide what to do with these numbers.”

—David Russell, Global Head of Market Strategy at TradeStation

“The resiliency of the U.S. economy in the face of what has already been significant tightening, is good and bad. Good in that unemployment remains low and economic growth positive, but potentially bad in the sense it might lead to an ultimately higher terminal fed funds target for the Fed. Today’s inflation report matched expectations but higher energy prices reversed some recent declines in headline inflation and, despite a decline on owners’ equivalent rents, core inflation came in a tenth of a percent hotter than expected. Inflation is not overly hot, but it might be the easy improvements are behind us and we still have a labor market which is imbalanced and an economy growing above trend. The Fed cannot be complacent here.”

—Steve Wyett, Chief Investment Strategist from BOK Financial

“While these numbers do not change our, and the market’s, expectations that the Fed will hold the target Fed Funds rate unchanged at the September meeting, the slightly stronger number can influence the tone of the press conference and Summary of Economic Projections (SEP). We continue to expect some reduction in the number of participants projecting further hikes, but probably not enough to move the median projection of one more rate hike. That said, we believe that we have likely seen the last rate hike for this cycle, as the economic data that the Fed will see over the coming months will keep them on hold and allow the impact of 5.25% of prior hikes to slow the economy and inflation.”

—Greg Wilensky, Head of US Fixed Income at Janus Henderson Investors


Kyle Woodley is the Editor-in-Chief of Young and the Invested. His 20-year journalistic career has included more than a decade in financial media, where he previously has served as the Senior Investing Editor of Kiplinger.com and the Managing Editor of InvestorPlace.com.

Kyle Woodley oversees Young and the Invested’s investing coverage, including stocks, bonds, exchange-traded funds (ETFs), mutual funds, real estate, alternatives, and other investments. He also writes the weekly Weekend Tea newsletter.

Kyle spent five years as the Senior Investing Editor at Kiplinger, and six years at InvestorPlace.com, including two as Managing Editor. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, the Nasdaq, Barchart, The Globe and Mail, and U.S. News & World Report. He also has made guest appearances on Fox Business and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice, and Univision.

He is a proud graduate of The Ohio State University, where he earned a BA in journalism … but he doesn’t necessarily care whether you use the “The.”

Check out what he thinks about the stock market, sports, and everything else at @KyleWoodley.