US Inflation Holds Firm, Fueling Rate Hike Expectations

The US consumer price index (CPI) rose by 0.4 percent in August, according to the Bureau of Labor Statistics. This monthly increase pushed the annual inflation rate back up to 3.4 percent, matching July's figure.

Energy costs drove this month's CPI growth, while core CPI, which excludes food and energy prices, came in at 2.4 percent. These numbers reinforce investor expectations that a Federal Reserve interest rate hike is likely next week.

The August CPI report is the final major inflation indicator before the Fed's policy meeting, which will conclude with a decision on interest rates. The CME Group's FedWatch tool shows an 88.8 percent probability of a 25 basis point rate increase.