Sticky Inflation Keeps Borrowing Costs High for US Homebuyers

US inflation remained firm in August, keeping pressure on borrowing costs as the Federal Reserve prepares for its next policy meeting.

The Consumer Price Index (CPI) increased 0.4% in August from July, compared with a 0.1% rise in July. Annual inflation remained at 3.4%, unchanged from the previous month.

Higher energy costs were a major contributor to the monthly increase. Gasoline prices rose 3.9% during August, while the overall energy index increased 2.1%. This could further stretch budgets for homebuyers, who are already dealing with elevated mortgage payments.

The core CPI, which excludes food and energy, increased 0.3% month over month and was up 2.4% annually. Economists pointed to persistent services inflation as evidence that underlying price pressures have not disappeared, potentially making the Federal Reserve more cautious about lowering interest rates quickly.