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August CPI Hits 3.4% as Energy Surge Keeps September Rate-Hike Odds at 73%

U.S. Bureau of Labor Statistics2 min read6 sources

What did August 2026 CPI show?

August consumer prices rose 3.4% year over year on Friday, matching consensus, as Brent crude above $101 a barrel keeps September 16 Fed rate-hike odds near 73% and weighs on S&P 500 (^GSPC).

Key numbers

August CPI (YoY)3.4%Matches 3.4% consensus; +0.4% MoM
August Core CPI (YoY, est.)2.4%Eased from July's 2.5%; +0.4% MoM est.
Energy CPI (YoY, July 2026)+14.7%Aug. reversing Jul.'s -1.5% MoM drop sharply
Brent Crude (Sep 10 open)$101.64/bbl+13.9% Sep MTD
CME FedWatch Sep 16 Hike Odds~73%Up from ~40% pre-Jul. 29 FOMC; 70% post-PPI
Current Fed Funds Rate3.50–3.75%Held at Jul. 29 meeting (9-3 vote)

What happened

August consumer prices rose 3.4% year over year on Friday, matching consensus, as Brent crude above $101 a barrel keeps September 16 Fed rate-hike odds near 73% and weighs on S&P 500 (^GSPC). Energy prices — up 14.7% over the past year — are the biggest driver keeping headline inflation above the Fed's 2% target; Iran's September 4 strike on Kuwait pushed Brent above $100 and kept it there. Three Federal Reserve officials voted to raise rates at the July 28–29 meeting rather than hold — arguing that waiting would only force bigger hikes later — and that rare public split makes the September 16 vote the highest-stakes Fed decision in years.

Why it matters

The CPI reading is the last inflation data the Fed will see before its September 16 rate decision — a meeting where officials could raise interest rates for the first time in over three years. A rate hike makes mortgages, car loans, and credit cards more expensive for everyday Americans and tends to push stock prices lower. With energy above $100 a barrel and inflation at 3.4%, Fed Chair Warsh's warning that there is still 'work to do' on prices now looks prescient.

Who this affects

Marketbearish
High impact
Stocks and bonds fall as September hike odds reach 73%.
Companybearish
Medium impact
Higher borrowing costs raise expenses for debt-heavy companies.
Competitorsmixed
Medium impact
Energy firms benefit from $101 oil; rate-sensitive stocks face selling.
Industrybearish
High impact
High inflation keeps Fed rate pressure on the whole economy.

S&P 500 vs 10-Year Treasury, Brent Crude, US Dollar Index

S&P 500^GSPC7,591-0.58%—
10-Year Treasury YieldDGS10~4.90%——
Brent CrudeBNO$101.64—+13.9%
US Dollar IndexDXY99.05-0.03%—

As of 2026-09-10

How we got here

  1. FOMC holds rates 9-3; Hammack, Kashkari, Logan dissent for immediate hike.

  2. Fed Chair Warsh says inflation still needs 'work to do' at Jackson Hole.

  3. Iran strikes Kuwait; Brent crude breaks above $100/barrel.

  4. August PPI beats forecast; rate-hike odds hit 70%; S&P 500 falls for 4th straight day.

  5. August CPI 3.4% YoY matches consensus; Sep. 16 hike odds edge near 73%.

What to watch

  • September 15-16 FOMC decision: hike to 3.75-4.00% or hold at 3.50-3.75%.2026-09-16
  • Brent crude: sustained above $100 keeps October 2026 hike risk elevated.Q4 2026
  • Fed Chair Warsh press conference tone on future rate path after September 16 vote.2026-09-16

Educational content only. Not investment advice.

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