U.S. August CPI up 2.9% 'in line with expectations'

No sharp price surge despite high tariffs

New unemployment claims highest in 4 years

The size of rate cuts this year may widen

Despite concerns that the Trump administration's high-tariff policies would stoke inflation, August U.S. consumer price growth did not rise sharply. However, labor market indicators deteriorated to their worst in four years, raising the possibility of a larger cut in the policy rate this year.

The U.S. Department of Labor said on the 11th that the U.S. Consumer Price Index (CPI) for August rose 2.9% year-on-year. This matched market estimates and was slightly up from the previous month (2.7%). The month-on-month increase was 0.4%, a bit higher than the estimate (0.3%). Food prices rose 0.5% over the month, acting as a source of price pressure.

Core CPI, excluding volatile energy and food, rose 3.1% year-on-year, the same as in July. Markets had feared that the Trump administration's high-tariff policies would push up prices, but with August CPI staying within expectations, financial markets showed relief.

However, employment data released the same day shocked markets. Last week (Aug. 31–Sept. 6), new unemployment benefit claims rose by 27,000 from the previous week to 263,000, the highest in about four years.

Tiffany Wilding, a PIMCO economist, said in an interview with Bloomberg TV, "Inflation appeared as expected, but the surge in unemployment claims is a far more worrying signal," adding, "The U.S. central bank (Fed) may take this as a very serious problem."

Reporter Im Dayeon allopen@hankyung.com