August CPI Report Forecasts Point to Sticky Inflation and Tariff Pressures

The August 2025 Consumer Price Index report is expected to show inflation remaining stubbornly elevated, with economists projecting tariff costs to continue filtering through the economy.

Economists expect the CPI to rise 0.3% on a monthly basis in August and 2.9% year over year, according to the latest consensus estimates from FactSet. Core CPI, which excludes volatile food and fuel prices, is also expected to come in at 0.3% on a monthly basis for August and 3.1% year over year.

“Core CPI has risen sequentially in each of the last two readings, and we expect the trend to continue for August data,” writes Christopher Hodge, chief economist for the US at Natixis. “The buildup of inventories by firms has helped to shield consumers from excessive price pressures, and the overall inflation readings the last several months were fairly benign. Those inventories have decreased, tariff revenues are up over 150% as compared to last fiscal year, and firms cannot bear the costs of tariffs indefinitely.”

“The staggered implementation of tariffs should prevent a single month with spiking prices and instead, we can expect this to be another inflation reading that shows higher, but not alarmingly high, price increases,” he adds.

August CPI Report Highlights

• CPI report release date and time: Thursday, Sept. 11, at 8:30 a.m. Eastern time.
• The CPI is forecast to rise 0.3% in August after rising 0.3% in July.
• Core CPI is forecast to rise 0.3% in August after rising 0.3% in July.
• The CPI year over year is forecast to rise 2.9% in August after rising 2.7% in July.
• Core CPI year over year is forecast to rise 3.1% in August after rising 3.1% in July.

Factors Driving the August CPI Rise

Russell Price, chief economist at Ameriprise, expects a hotter-than-consensus 0.4% increase on a monthly basis. “We think that the tariff costs are going to flow through, plus a further increase in food prices,” he says.

Price adds that common food items, such as beef prices, have been going “through the roof,” which will provide a boost to the headline numbers despite some offsetting from shelter costs.

Goldman Sachs economists predict August’s core CPI will rise 0.36%, slightly above the consensus of 0.30%, pushing the year-over-year rate to 3.13%. Overall CPI is forecast by Goldman economists to climb 0.37% for the month, driven by higher food prices, which they predict rose by 0.35%, and energy prices, which are expected to show an increase of 0.60%. New- and used-car prices, along with airfare, are expected to have lifted core inflation, according to Goldman Sachs.

When it comes to the impact of President Donald Trump’s levies on imports, “we have penciled in upward pressure from tariffs on categories that are particularly exposed, such as communication, household furnishings, and recreation,” the Goldman economists wrote.

“Over the next few months, we expect tariffs to continue to boost monthly inflation and forecast monthly core CPI inflation around 0.3%. Aside from tariff effects, we expect underlying trend inflation to fall further, reflecting shrinking contributions from the housing rental and labor markets.”

Bank of America economists expect “inflation to remain sticky in August.” They forecast an overall 0.3% increase in the CPI for July “owing to rising energy prices, steady tariff-driven goods inflation, and firm nonhousing services.”

Overall, the impact of tariffs should “continue to trickle through to consumers,” the Bank of America economists wrote. “Tariffs should contribute to ongoing price increases in household furnishings, apparel, and recreation commodities. We expect tariffs to remain a source of goods price inflation over the next few quarters.”

Ameriprise’s Price believes that the tariff price impact on the CPI will be relatively short-lived: “I’m looking for inflation to peak in the November-December time frame with the influence of the tariffs.”

Price thinks CPI inflation should max out between 3.2% and 3.4%.

Katie Klingensmith, chief investment strategist at Edelman Financial Engines, says the tariff impact is more than just what is showing up in the official data. She notes that August’s University of Michigan survey showed households expecting inflation to rise 4.8% over the next year compared with just 2.6% in market forecasts.

“Tariffs tend to push CPI higher in a one-off way when costs are passed through, but the real risk is psychological,” she says.

The drawn-out nature of tariff policy, Klingensmith adds, has created a “slow burn of higher costs and supply disruptions rather than a single shock,” leaving households feeling that prices keep creeping up.

José Torres, senior economist at Interactive Brokers, predicts a softer-than-consensus 0.1% monthly increase in the CPI and a 2.8% year-over-year rise.

“Some of the really hot aspects from last month are going to cool off, namely used and new cars,” he says.

Meanwhile, Torres points to energy and transportation as some of the hotter sectors for the August report.

Torres says the recent trend of higher inflation has been fueled by the services sector, not goods prices, which are directly affected by tariffs.

“We’ve been seeing that inflationary pressures have actually been driven by services, which is not what anyone expected,” Torres says. “I’m expecting that to continue, and really that’s a function of consumers rebounding from an uncertain first half.”

When Will the Fed Cut Rates?

Edelman’s Klingensmith says a stronger-than-expected CPI print would confirm the drift from the Federal Reserve’s 2.0% target.

“That suggests that the disinflationary trend that dominated the past year is losing steam, with price growth potentially picking up,” she says.

This may add complexity for the Fed, which would make it hard for it to “only focus on the softening employment picture” and lead to stagnant real income, according to Klingensmith.

“If CPI comes in above 3% as expected this week, it would reaffirm that inflation has moved farther from the Fed’s 2% target,” she says.

However, with recent weakness in the jobs data, futures markets are pricing in an 88% chance of a quarter-point interest rate cut from the Fed in September, according to the CME FedWatch tool, with a 72% chance of a further quarter-point cut in October.

Klingensmith says a rate cut this month appears to be on its way.

“At this point, the Fed has signaled that it is focused on risks to the job market and a September 25-basis-point cut is all but baked in,” she notes, adding that the real question is how many cuts follow and at what pace.

Ameriprise’s Price expects a quarter-point rate cut in September, but doesn’t “think that we’re likely to see one in October, as inflation is continuing to accelerate. I think that’d be a difficult decision for them.”

“But in 2026, I think they can play catch-up, and they can cut as inflation falls over the first half of 2026,” Price adds. ”I think that there’s plenty of room for them to cut interest rates at that time.”