August 2025 CPI report may show inflation climbing to 2.9%
Economists expect August inflation to tick up, adding pressure on shoppers and the Fed before its Sept. 17 rate decision.
By Sal Moretti · Money Reporter
3 min read
The August 2025 CPI report is expected to show inflation heating up again, with prices rising at a 2.9% annual rate after a 2.7% pace in July, according to forecasts cited by CBS MoneyWatch.
That would keep inflation above the Federal Reserve’s 2% target and add another squeeze for households already feeling pinched by groceries, housing costs and basic upkeep.
Kasey McBlais, a 42-year-old single mother in Maine who works at a nonprofit, told CBS MoneyWatch that her family’s budget is running paycheck to paycheck. She said a chimney cleaning that cost about $200 when she bought her home in 2019 cost $500 this year, while grocery trips require more planning so meals can stretch into leftovers.
McBlais said she does not expect prices to return to earlier levels and is hoping instead for costs to level off where they are.
What will the August 2025 CPI report show?
The Consumer Price Index tracks what consumers pay for a basket of goods and services, making it one of the main inflation gauges watched by the Federal Reserve, economists and households. The coming report is expected to show price growth picked up in August after rising 2.7% in July.
A recent CBS News poll found that two-thirds of Americans said prices had continued to rise in the past few weeks. Nearly all respondents said they expected costs to keep going up.
Some economists say tariffs imposed by the Trump administration are part of the pressure. Erasmus Kersting, an economics professor at the Villanova School of Business, told CBS MoneyWatch that tariffs raise prices and can feed inflation.
Inflation remains far below its pandemic-era high, but recent CPI readings have shown price growth picking up after hitting a low point in the spring, according to CBS MoneyWatch.
Why does this matter for the Fed?
The Federal Reserve is scheduled to make its next interest rate decision on Sept. 17. A hotter inflation reading would put the central bank in a tighter spot because the job market has also shown signs of slowing this summer.
The Fed’s mandate is to support maximum employment while keeping inflation under control. Rate cuts can make borrowing cheaper for consumers and businesses, which may help hiring, but they can also add demand and put more pressure on prices.
Fed Chair Jerome Powell has kept rates steady so far in 2025, saying the central bank wanted room to respond if tariffs pushed inflation higher, CBS MoneyWatch reported. After two weaker jobs reports, Powell signaled last month that the Fed could be open to a cut because of risks in the labor market.
CME FedWatch, which uses 30-day Fed Funds futures prices, put the probability of a quarter-point rate cut at 90%. Its data showed a 10% chance of a larger half-point cut.
What is the White House saying?
President Trump has been pressing the Fed to lower rates. On Wednesday, he posted on social media that there is “no inflation” and called for a large immediate rate cut, according to CBS MoneyWatch.
In July 2024, when Trump pledged to end what he called the “inflation nightmare,” the CPI rate was 2.9%, the same rate economists are forecasting for the August report, CBS MoneyWatch reported.
White House spokeswoman Taylor Rogers told CBS MoneyWatch that Trump had ended what she called the inflation crisis created under Joe Biden. She said core inflation has averaged 2.4% since Trump took office, calling it the lowest six-month pace since March 2021, and said tariffs have not raised prices.
For consumers, any Fed cut could lower borrowing costs on credit cards, home equity lines and some loans. Stephen Kates, a certified financial planner and Bankrate financial analyst, told CBS MoneyWatch that budget pressure has not fully eased for many households, even after inflation cooled during 2024 and early 2025.
This story draws on original reporting from CBS News.