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Consumer inflation heated up in August — accelerating slightly from a month earlier although not enough to discourage bets that the Federal Reserve will start cutting interest rates next week.
The Consumer Price Index rose 2.9% in August compared to the previous year, speeding up from 2.7% in July, the Bureau of Labor Statistics said Thursday.
It jumped 0.4% from the previous month, above expectations of a 0.3% increase.
On a core basis, which excludes volatile food and energy prices, the CPI rose 3.1% over the past 12 months, remaining steady from the month before.
But it would have taken a wild inflation report to squash rate cut hopes after Fed Chairman Jerome Powell signaled last month that central bankers are more concerned with weakness in the labor market than inflation fears.
Just ahead of the consumer price report, traders had bet on 100% odds that the Fed will slash rates by at least a quarter point at its meeting next week, according to CME FedWatch.
