The August 2026 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation rose by 0.4% this month, up from a 0.1% increase in July. These data were released at 8:30 am EST on September 11, 2026, by the Bureau of Labor Statistics (BLS). Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 3.4%, matching the print from July.
This month’s results mostly aligned with economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents August’s figures, while the right column represents forecasters’ expectations. As you can see, there weren’t many surprises.
Yet, as the US-Iran war intensifies and oil prices surge, Fed policy is back in the spotlight. Although interest rates have risen materially, many analysts expect the Fed to increase its policy rate at next week’s meeting. There are several crosscurrents the committee must navigate, which makes the decision highly crucial for the US economy and the financial markets.
Food Prices
The food index increased by 0.1% in August, matching the 0.1% rise in July. Four of the major grocery indices increased this month, one was flat, and one decreased.
- Cereals and bakery products (+0.0%)
- Meats, poultry, fish, and eggs (+0.1%)
- Dairy and related products (+0.3%)
- Fruits and vegetables (-0.4%)
- Nonalcoholic beverages (+0.2%)
- Other food at home (+0.1%)
In addition, the food away from home index increased by 0.3%, as restaurant inflation surpassed grocery inflation once again.
Energy Prices
The energy index rose by 2.1% MoM in August after dropping by 1.5% MoM in July. Gasoline prices jumped by 3.9%, while electricity fell by 0.2%, and natural gas by 1.1%.
Core CPI
The August core CPI rose by 2.4% Y-o-Y, down from 2.5% in July. Below is an itemized breakdown of the various components:
- Shelter index: (+0.3%) [July: +0.1%]
- Rent index: (+0.2%) [July: +0.3%]
- Owners’ equivalent rent: (+0.2%) [July: +0.3%]
- Motor vehicle insurance: (-0.8%) [July: -0.3%]
- Medical care services: (-0.2%) [July: +0.6%]
- Physician services: (+0.0%) [July: +0.2%]
- Hospital services: (+0.0%) [July: +0.5%]
- Airline fares: (+2.7%) [July: +2.2%]
Seasonally Unadjusted CPI
Before seasonal adjustments, the CPI-U for August 2026 increased by 3.4% Y-o-Y to an index level of 334.980. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
A Fork In the Road
While higher oil prices remain troublesome for inflation, it’s difficult for the Fed to control geopolitics and the pricing pressures that follow. As a result, core inflation is typically the best metric to follow — since it excludes the effects of food and energy. However, market participants seem keen on forcing the Fed’s hand, which makes for difficult decisions in the weeks ahead.
For example, US nonfarm payrolls greatly exceeded expectations on September 4. The economy added 162,000 net new jobs, and the unemployment rate held steady near multi-year lows. Consequently, the labor market outlook remains solid, which could allow the Fed to focus solely on inflation.
In contrast, the rapid rise in Treasury yields and oil prices is causing immense stress in the subprime bond market. Lenders charge an interest rate ‘spread’ above government bonds to compensate for potential default risks. And with the spread on CCC & Lower bonds (the riskiest borrowers) surging, stressed companies will face even more trouble refinancing their loans and obtaining credit.
As such, a rate hike will likely only worsen the situation, potentially creating a default event that shifts the Fed’s problem in the other direction.
But despite the juggling act, market participants have officially chosen the former. The chart below highlights how the US oil price (blue) and the US 2-Year Treasury yield (black) have soared in recent weeks. The 2Y is a known proxy for the federal funds rate, and given its rapid ascent, investors expect more than one rate hike to materialize in the months ahead.
As for gold, it remains caught in the volatility, as higher interest rates are typically bearish for the yellow metal. However, Goldman Sachs increased its year-end 2026 gold price forecast to $4,900 (from $4,600) on August 28, citing central bank purchases as the main driver. The report noted:
“Goldman Sachs Research expects central banks to buy an average of 50 tonnes of gold per month in 2026, up from an average of 17 tonnes per month before 2022.
“Central bank purchases accelerated to 100 tonnes per month in June 2026 (on a three-month seasonally adjusted basis) from 66 tonnes the previous month, according to Goldman Sachs Research’s nowcast of central bank activity. China’s central bank was the largest identifiable buyer in the market in June.”
Thus, while headline-driven swings may persist, gold’s structural outlook remains constructive.
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Alex Demolitor is a financial writer and cross-asset analyst who completed the CFA Program, passing all three levels of the CFA exams. He has a Bachelors degree from King's College in Ontario and specializes in the fundamental analysis of stocks, bonds, commodities, and FX, with a focus on U.S. and Canadian economic indicators like CPI and inflation. His market analysis has appeared on major publications such as FXEmpire, Investing.com, and AdvisorPedia.
