August CPI Comes In Hot on Core; Fed September Hike Odds Jump to 87% as Stocks Rebound on Falling Oil

The Bureau of Labor Statistics' August 2026 CPI report, released September 11, showed the headline index rose a seasonally adjusted 0.4% for the month, putting the 12-month rate at 3.4% — both in line with the Dow Jones consensus. But core CPI (excluding food and energy) rose 0.3% MoM, 0.1 percentage point above the 0.2% forecast, while the core annual rate held at 2.4%, matching expectations. Gasoline rose 3.9% in August, accounting for over a third of the monthly all-items increase, while shelter (+0.3%), communication (+2.3%), and airline fares (+2.7%) also contributed to the core upside; medical care (-0.2%) and motor vehicle insurance (-0.8%) partially offset the gains. Traders responded by pushing CME FedWatch odds of a 25bp hike at the September 15-16 FOMC meeting to roughly 87%, up sharply from about 70% ahead of the release, with economists including Nationwide's Kathy Bostjancic noting that Chair Warsh's condition for a hold — continued disinflation — was not met. Equities nonetheless rallied as oil prices pulled back from Thursday's four-month high, ending a four-session losing streak: the Dow rose 1.03% to 52,602.74, the S&P 500 gained 1.07% to 7,672.80, and the Nasdaq climbed 1.23% to 26,403.77.