US CPI Holds Steady at 3.4%, Fueling Expectations for September Rate Hike

The US Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.4 percent on a seasonally adjusted basis in August, following a 0.1 percent rise in July.

Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment, matching July's pace but coming in slightly higher than economists had forecasted at 3.3%.

The index for gasoline rose by 3.9 percent in August, accounting for over one third of the monthly all items increase, while the shelter index rose 0.3 percent in August after rising 0.1 percent in July.

Traders now see a 90% chance of a Fed rate hike next week, compared to about 70% before the inflation report, which could indicate that the Federal Reserve's primary focus on reining in price pressures remains unchanged.