U.S. August Inflation Nudges Up to 2.9%

The U.S. inflation rate hit 2.9% in August 2025. Up from July's 2.7%. It's the highest we've seen since January.

Fed officials didn't wait around. They cut rates. The new benchmark sits at 4%-4.25% now. First cut of 2025. Wall Street seemed pretty happy about the whole thing—indexes climbed after the news broke.

Inflation ticked up a bit, yes. But the Fed's still eyeing that magical 2% target they've always talked about. Not there yet. The PCE price index—which the Fed kind of obsesses over—suggests consumer prices remain stubbornly high. Yet it seems the numbers aren't entirely surprising to the central bank. They've seen this pattern before.

Markets responded well. Perhaps too well? Hard to say if this enthusiasm has staying power. The Fed's moves suggest they're not particularly worried about this minor uptick, though the path to 2% looks a bit longer than some had hoped.