Why It Matters: The Consumer Price Index (CPI) measures a mixed basket of costs of goods and services in the U.S., and is used as an important gauge of inflation (high inflation = your dollar buys you less). Prices in August saw the highest monthly gain of 2023 with an 0.6% increase in prices from July to August. Prices increased 3.7% from a year ago, slightly higher than expected. Energy prices – particularly the surge in gas prices – contributed most significantly to August inflation. Core inflation ("core CPI") – which is seen as a better gauge of inflation because the measure strips out food and energy prices, which can be volatile – showed prices increasing 4.3% over the past year (driven largely by price increases in shelter [rent, housing]).

Important Context: The Federal Reserve references CPI data when deciding the future of interest rates. CNBC explains that "Markets largely expect the Fed to skip a hike at next week's meeting," while The New York Times notes that Fed officials "will probably debate whether one more rate move might be warranted later this year."

August core inflation, excluding food and energy, rose 0.3%, hotter than expected