The August 2025 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.4% for the month, double the 0.2% rise in July. These data were released at 8:30 am EST on September 11, 2025, by the Bureau of Labor Statistics (BLS). Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.9%, up from 2.7% in July.
The results aligned near economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents August’s figures, while the right column represents forecasters’ expectations. As you can see, core came in as expected, while the monthly headline figure outperformed.
While Fed Chairman Jerome Powell hinted at a potential rate cut later this month, the FOMC has been cautious in its approach to monetary policy. Rather than encourage another round of inflation by cutting rates prematurely, the committee has prioritized price stability, and today’s results did little to eliminate the concerns.
Used cars and trucks were the primary outliers, with both rising by 1.0% MoM. Gasoline prices also rose by 1.9% MoM after declining by 2.2% in July. Core inflation (which excludes the impacts of food and energy), rose by 0.3% in August, matching the 0.3% from July, and slightly outperforming the 0.2% in June.
Food Prices
The food index rose by 0.5% MoM in August following a flat reading in July. All six major grocery store food indexes increased:
- Cereals and bakery products (+0.1%)
- Meats, poultry, fish, and eggs (+1.0%)
- Dairy and related products (+0.1%)
- Fruits and vegetables (+1.6%)
- Nonalcoholic beverages (+0.6%)
- Other food at home (+0.1%)
Maintaining its momentum, the food away from home index rose by 0.3%, mirroring July, and slightly underperforming the 0.4% increase in June.
Energy Prices
The energy index jumped by 0.7% in August after declining by 1.1% in July. Gasoline prices increased by 1.9%, electricity by 0.2%, while natural gas dropped by 1.6%.
Core CPI
The August core CPI rose by 0.3% month-over-month and 3.1% Y-o-Y. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.4%) [July: +0.2%]
- Rent index: (+0.3%) [July: +0.3%]
- Owners’ equivalent rent: (+0.4%) [July: +0.3%]
- Motor vehicle insurance: (+0.0%) [July: +0.1%]
- Medical care services: (-0.1%) [July: +0.8%]
- Physician services: (+0.3%) [July: +0.2%]
- Hospital services: (+0.0%) [July: +0.5%]
- Airline fares: (+5.9%) [July: +4.0%]
Seasonally Unadjusted CPI
Before seasonal adjustments, the CPI-U for August 2025 increased by 2.9% Y-o-Y to an index level of 323.976. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Cuts Coming?
While the U.S. labor market has been weakening for some time, conflicting data had the FOMC preaching patience. However, with several sources converging recently and signaling a slowdown, a September rate cut is likely a done deal.
For example, the BLS released its latest U.S. nonfarm payrolls report on Sep. 5. The economy added 22,000 net new jobs (well below expectations), and the report stated:
“The change in total nonfarm payroll employment for June was revised down by 27,000, from +14,000 to -13,000, and the change for July was revised up by 6,000, from +73,000 to +79,000. With these revisions, employment in June and July combined is 21,000 lower than previously reported.”
Thus, while a 21,000 miscount may not seem like much, the key revelation was that June’s revision to -13,000 was the first net negative print since 2021.
To that point, the BLS reported on Sep. 9 that annual revisions showed the U.S. added 911,000 fewer jobs over the last 12 months than previously reported. An excerpt read:
“The preliminary estimate of the Current Employment Statistics (CES) national benchmark revision to total nonfarm employment for March 2025 is -911,000 (-0.6 percent), the U.S. Bureau of Labor Statistics reported today. The annual benchmark revisions over the last 10 years have an absolute average of 0.2 percent of total nonfarm employment.”
Finally, The Conference Board revealed on Aug. 26 that Americans’ assessment of the labor market continued to deteriorate. Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board, said, “Consumer confidence dipped slightly in August but remained at a level similar to those of the past three months. The present situation and the expectation components both weakened. Notably, consumers’ appraisal of current job availability declined for the eighth consecutive month.”
More importantly, The Conference Board’s ‘labor differential’ metric soared to a new cycle high.
To explain, the gray line above tracks the U.S. unemployment rate, while the red line above tracks the labor differential. When the red line rises, it means that more survey respondents believe that jobs are “hard to get” versus “plentiful.”
Furthermore, with a rising red line often a precursor to a higher unemployment rate, the sharp spike on the right side of the chart should be a cause for concern for the FOMC.
All in all, while inflation uncertainty remains high, the second half of the FOMC’s dual mandate — maximum employment — remains challenged. Therefore, a continuation of the trend should result in more rate cuts in the months ahead.
As the drama unfolds, gold is the clear winner. The yellow metal hit another record high in September, and Goldman Sachs expects more upside in the months and years ahead.
To explain, the blue line above tracks the consolidated gold holdings of global central banks, while the red dashed line above tracks Goldman Sachs’ projection over the next several months.
As you can see, continued demand from the largest buyers should help keep the gold price elevated for the foreseeable future.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Please seek the guidance of a financial advisor before making any investment decision.
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Alex Demolitor is a Canadian financial writer hailing from Halifax, NS. Alex has a Bachelors Degree from King’s College and passed the CFA Exam Level III. He specializes in fundamental analysis of the stock, bond, commodity, and FX markets. He also covers US & Canadian economic indicators.
