US inflation rises to 2.7% in August
The Federal Reserve's preferred inflation gauge—the PCE price index—rose 2.7% in August 2025 compared to last year, a bit higher than July.
Core inflation (which leaves out food and energy) held steady at 2.9%. So, prices are still climbing.
While the overall PCE increase was in line with expectations, core inflation was slightly lower than some forecasts.
Fed cut rates last week
Even with inflation above their 2% goal, the Fed decided to lower interest rates by 0.25% points last week—the first cut since December 2024.
The monthly PCE increase was only 0.26%, slightly less than experts predicted.
CPI also showed a yearly jump
The Consumer Price Index (CPI) also showed a 2.9% yearly jump in August.
Analysts say core inflation has stuck above 2.5% since mid-2024—especially for services—so getting back to that magic "2%" target might take longer than anyone hoped.