U.S. consumer prices increased by 0.2% in August, matching the Dow Jones consensus forecast. This brings the annual inflation rate down to 2.5%, the lowest it has been since February 2021, marking a continued decline in inflationary pressure.

The Federal Reserve is expected to respond with a 25 basis point interest rate cut during its upcoming meeting, as traders have priced in an 85% chance of this reduction.

Despite the easing inflation, core prices—excluding food and energy—rose by 0.3%, slightly above estimates. Housing costs remain a concern, with the shelter index rising 5.2% year-over-year.