Thursday’s economic releases revealed an unusual mix of rising prices and a spike in jobless claims — a toxic cocktail that thrusts the U.S. economy into a stagflationary environment and places the Federal Reserve in one of the toughest positions a central bank can face.
In August 2025, the Consumer Price Index (CPI) rose 2.9% from a year earlier, matching expectations but marking the highest level since January.
On a monthly basis, inflation accelerated to 0.4% from July’s 0.2%, overshooting forecasts for a 0.3% increase. Excluding volatile food and energy categories, core CPI held steady at 3.1% year-over-year — exactly in line with expectations but still uncomfortably above the Fed’s 2% goal. Core prices rose 0.3% month-over-month.
Shelter costs were the largest contributor, climbing 0.4% in August. Food prices rose 0.5% overall, driven by a 0.6% increase in groceries …