CPI rose 2.9% and Core CPI rose 3.1% as expected in August.

"In August, the Consumer Price Index for All Urban Consumers rose 0.4 percent, seasonally adjusted, and rose 2.9 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.3 percent in August (SA); up 3.1 percent over the year (NSA)."

The expected inflation, combined with an increasingly weak job market, sets the stage for the expected next week's Fed interest rate cut. There was a 92% chance of a 25 bp cut and 8% chance of a 50 bp cut prior to this morning's CPI report.

Wall Street is looking forward to a more aggressive trajectory of rate cuts alongside the slowing jobs market. A growing number of economists now forecast a quarter-point rate cut at each of this year’s three remaining meetings, instead of just two cuts. 

"The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent on a seasonally adjusted basis in August, after rising 0.2 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment.

The index for shelter rose 0.4 percent in August and was the largest factor in the all items monthly increase. The food index increased 0.5 percent over the month as the food at home index rose 0.6 percent and the food away from home index increased 0.3 percent. The index for energy rose 0.7 percent in August as the index for gasoline increased 1.9 percent over the month.

The index for all items less food and energy rose 0.3 percent in August, as it did in July. Indexes that increased over the month include airline fares, used cars and trucks, apparel, and new vehicles. The indexes for medical care, recreation, and communication were among the few major indexes that decreased in August.

The all items index rose 2.9 percent for the 12 months ending August, after rising 2.7 percent over the 12 months ending July. The all items less food and energy index rose 3.1 percent over the last 12 months. The energy index increased 0.2 percent for the 12 months ending August. The food index increased 3.2 percent over the last year."

https://www.bls.gov/cpi/

https://www.bls.gov/news.release/cpi.nr0.htm#

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html