US Inflation Holds Steady at 3.4%, Energy Prices Drive Increase

The August Consumer Price Index (CPI) report revealed that inflation remained steady at 3.4% from a year earlier, matching July's pace but coming in slightly higher than economists had forecast.

Economists polled by FactSet expected inflation to rise at an annual rate of 3.3%, but the actual figure was 0.1% higher due to rising energy prices, which increased 2.1% over the month and accounted for a third of the monthly all items increase.

The shelter index rose 0.3% in August, while the index for food increased by just 0.1%, with the index for food away from home increasing 0.3%. The core CPI was firmer than expected, rising 0.29% on the month (3.5% annualized).

The Federal Reserve's interest rate decision, set for Wednesday, September 16, may be influenced by this report. Fed Chairman Kevin Warsh indicated in a speech last month at Jackson Hole that reining in price pressures remains the Fed's primary focus.