US Core Inflation Accelerates, Raising Rate Hike Expectations

The US Consumer Price Index rose 0.4% in August, meeting market expectations. However, core CPI, which excludes volatile food and energy prices, increased by 0.3%, exceeding forecasts of a 0.2% rise.

This acceleration in core inflation could strengthen the case for a rate hike when the Federal Reserve concludes its policy meeting next week.

Joseph Brusuelas, principal and chief economist at RSM US, argued that several factors are driving up inflationary pressures, including war-induced energy shocks, tariffs, and increased demand for commodities and finished goods to support artificial intelligence infrastructure buildout.

Brusuelas believes the Fed should reconsider its past rate cuts and slow an economy growing above trend. He argues this would shift some of the current inflationary pressure onto corporate balance sheets through lower profit margins.