Peter C. Earle
The AIER On a regular basis Value Index (EPI) rose 0.21 % to 296.7 in August 2025. Our proprietary inflation index is up 2.9 % since January 2025, and this improve marks its ninth consecutive month-to-month rise. Among the many 24 worth classes, 13 noticed worth will increase, two had been unchanged, and 9 noticed declines in August. The most important worth will increase occurred in web companies and digital info suppliers, tobacco and smoking merchandise, and leisure studying supplies, with the highest three worth declines seen in nonprescription medication; admission to motion pictures, theatres, and live shows; and buy, subscription, and rental of movies.
AIER On a regular basis Value Index vs. US Client Value Index (NSA, 1987 = 100)
On September 11, 2025, the US Bureau of Labor Statistics (BLS) launched its August 2025 Client Value Index (CPI) information. The month-to-month headline CPI rose 0.4 % (lacking forecasts of a 0.3 % improve) whereas the core month-to-month CPI quantity elevated by 0.3 %, which met expectations.
August 2025 US CPI headline and core month-over-month (2015–current)
The meals index rose 0.5 % in August after being unchanged in July. Meals at dwelling elevated 0.6 %, with all six grocery classes greater. Vegatables and fruits climbed 1.6 %, led by tomatoes up 4.5 % and apples up 3.5 %. Meats, poultry, fish, and eggs gained 1.0 %, with beef rising 2.7 %. Nonalcoholic drinks elevated 0.6 %, whereas each dairy merchandise and cereals and bakery merchandise edged up 0.1 %. Different meals at dwelling additionally rose 0.1 %. Meals away from dwelling superior 0.3 %, with full-service meals up 0.4 % and limited-service meals up 0.1 %.
The vitality index elevated 0.7 %, reversing a 1.1 % July decline, with gasoline up 1.9 %, electrical energy up 0.2 %, and pure fuel down 1.6 %. Excluding meals and vitality, the core index rose 0.3 %, matching July. Shelter superior 0.4 %, together with homeowners’ equal hire up 0.4 %, hire up 0.3 %, and lodging away from dwelling up 2.3 %. Airline fares jumped 5.9 % after a 4.0 % rise in July. Used automobiles and vans gained 1.0 %, attire rose 0.5 %, new automobiles elevated 0.3 %, and family furnishings superior 0.2 %, whereas recreation and communication each slipped 0.1 %. Medical care declined 0.2 %, following a July improve of 0.7 %, as dental companies fell 0.7 % and pharmaceuticals dropped 0.2 %; physicians’ companies rose 0.3 % and hospital companies had been unchanged.
The headline Client Value Index rose 2.9 % between August 2024 and August 2025, which was in step with the forecast. Surveys predicted a 3.1 % improve within the year-over-year core CPI measure, which it did.
August 2025 US CPI headline and core year-over-year (2015 – current)
The meals at dwelling index rose 2.7 % over the yr ending in August. Meats, poultry, fish, and eggs climbed 5.6 %, whereas nonalcoholic drinks superior 4.6 % and different meals at dwelling elevated 1.5 %. Vegatables and fruits rose 1.9 %, cereals and bakery merchandise gained 1.1 %, and dairy and associated merchandise edged up 1.3 %. Meals away from dwelling elevated 3.9 %, with full-service meals up 4.6 % and limited-service meals up 3.2 %.
The vitality index rose 0.2 % over the yr. Gasoline fell 6.6 % and gasoline oil declined 0.5 %, whereas electrical energy elevated 6.2 % and pure fuel surged 13.8 %. Excluding meals and vitality, the core index gained 3.1 %, led by shelter up 3.6 %. Extra will increase had been seen in medical care at 3.4 %, family furnishings and operations at 3.9 %, used automobiles and vans at 6.0 %, and motorized vehicle insurance coverage at 4.7 %.
Core shopper costs accelerated in August 2025, rising 0.3 % on the month and three.1 % year-over-year, with the headline index up 0.4 %, the quickest since January. Items inflation firmed to 0.3 %, matching the strongest tempo since mid-2023, as classes like new and used automobiles, attire, and home equipment superior. Analysts debated the position of tariffs, noting will increase in beef and tomatoes but additionally outright declines in tariff-exposed classes akin to home equipment and private computer systems. Providers inflation proved stickier, with airfares up 5.9 % and lodging 2.3 %, whereas shelter prices added 0.4 %, their largest month-to-month acquire this yr.
Tariff pass-through seems to be plateauing. Estimates counsel the coefficient of tariff shocks to CPI fell to 0.03 in August from 0.23 in July, in keeping with latest worth drops in classes akin to furnishings, sporting items, and electronics. Companies that raised costs earlier within the yr look like moderating amid shopper resistance, although common inflation throughout tariffed items nonetheless rose barely — a worrisome signal that opportunistic pricing could also be creeping in. Diffusion indexes reinforce that worth pressures stay broad: almost half of core CPI parts are nonetheless rising at an annualized fee above 4 %, though the share of classes posting outright declines climbed to 36 %, up from 27 % final month.
Labor market information provides complexity to the inflation backdrop. Preliminary jobless claims surged to their highest degree in almost 4 years, reinforcing issues that unemployment is trending greater after earlier payroll revisions reduce progress estimates sharply. Actual wages edged up simply 0.7 % from a yr earlier, the weakest in over twelve months, underscoring that family buying energy stays strained. Whereas surges in discretionary classes like airfares and accommodations level to still-resilient demand, the persistence of excessive shelter prices alongside rising claims suggests a softer labor market could also be colliding with entrenched service-sector inflation.
Market response captured the strain. Fed funds futures now worth about 27 foundation factors of easing at subsequent week’s FOMC assembly, with expectations for roughly 72 foundation factors of cuts by year-end. Policymakers are prone to ship an preliminary 25 foundation level discount, however immediately’s firmer inflation print complicates the trajectory for subsequent conferences. If core inflation continues to run at August’s tempo, the chance of a number of cuts diminishes, leaving the Fed to steadiness labor-market softness in opposition to dangers that tariff dynamics, shelter inflation, and opportunistic worth will increase might preserve underlying inflation elevated nicely into the autumn.
