U.S. inflation pressures eased notably last month, data indicated Wednesday, but core prices held steady, suggesting the Federal Reserve will likely be patient in lowering borrowing costs into the autumn months and beyond.
The Commerce Department said its headline Consumer Price Index for the month of August was pegged at an annual rate of 2.5%, down from the 2.9% pace recorded in June. and the lowest since February of 2021.
On a monthly basis, price pressures edged 0.2% higher, thanks in part to a modest 2.6% per gallon decline in domestic gasoline prices.
So-called core inflation, which strips out volatile components like food and energy, held at an annual rate of 3.2% matching Wall Street’s 3.2% forecast and pegged at the lowest rate in more three years.
The monthly reading of 0.3% was just ahead of Wall Street forecasts and was up modestly from the final July reading of 0.2%.
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U.S. stocks extended declines following the data release, with futures tied to the S&P 500 indicating an opening bell fall of around 22 points while those tied to the Dow Jones Industrial Average are priced for a 230 point pullback.
The tech-focused Nasdaq, meanwhile, was called 80 points lower.
Benchmark 2-year Treasury note yields jumped 8 basis points to 3.652% while 10-year notes were pegged at 3.668%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.2% lower at 101.440.
The CME Group’s FedWatch, meanwhile, suggests an 85% chance that the Fed will lower its benchmark lending rate by a quarter of a percentage point next week in Washington, up from around 71% prior to the data release.
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