How big was the uptick in inflation for August?
Posted on September 12, 2025

The most commonly reported measure for inflation for August was roughly double that of July and was the in the top three of the last 12 months. Inflation does not aim at the Federal Reserve’s target of 2% annual rate. It will be a tough call for the Federal Reserve’s decision on interest rates in a week or so: it wants inflation at 2% but also wants “full employment,” and monthly job growth has been far lower than in the past.

 

I display a table and six graphs that I use to follow the trends in inflation.

 

Details:

 

The two most widely-reported measures of inflation are Seasonally-adjusted inflation and Core inflation.

 

Seasonally-adjusted inflation is the most widely reported measure of inflation. August inflation was ~double that of July. Inflation for the last six months was at 2.2% annual rate. The last six months are lower than the prior six months. The 12-month inflation rate increased to 2.9% from 2.7%: this August was more than double the prior August that it replaced.

 

 

Core inflation excludes volatile energy and food components. Inflation for August was greater than July and was the second highest month in the last 12. Inflation over the last six months was at 2.7% annual rate – up from 2.4% rate last month. The last six months are lower than the prior six months. The 12-month inflation rate inched up to 3.1% from 3.0%.

 

 

Personal Consumption Expenditures (PCE) excluding Food and Energy is the measure of inflation that the Federal Reserve Board favors. It’s similar to Core inflation, but tends to run a bit lower over time. The graph shows the data ending July; data for August is issued at the end of this month. The last six aim at an annual rate of 3.0%. 

 

 

== History of 12-month inflation rates ==

 

Full-year inflation measured by CPI-U was 2.9%, the same as last month [CPI-U inflation is not seasonally adjusted; it’s 12-month rate matches the 12-month rates for Seasonally-adjusted inflation, above.]

 

 

 

I add a graph that shows this August replaced a low August 2024. September through December will replace very low months of inflation in 2024: 12-month inflation for this measure will likely increase in the next four months.

 

 

== Producer’s Price Index ==

 

The change in producer prices (wholesale prices) will impact consumer inflation. PPI announced Wednesday was below 0%. The the last six months are at an annual rate of 2.1%.

 

 

== Services ==

 

Inflation for services was for August was similar to July. The last six months average to 3.1% annual rate.

 

 

 

Conclusion: The inflation measures released this week for August were higher than July: we have not seen much of an increase due to greater tariffs, but we are not trending to 2% annual inflation, the Federal Reserve’s goal. The six-month rate for core inflation aims at 2.7% annual inflation, up from 2.4% last month.