US Consumer Prices Rise 3.4% as September Hike Odds Near 90%
August CPI and PPI repriced a September quarter point hike to the base case ahead of the Sept 16 FOMC decision.

August CPI, released Sept 11, rose 0.4% on the month and 3.4% on the year. Core rose 0.3%, above the 0.2% expected, while core year over year cooled to 2.4% from 2.5% in July. Gasoline rose 3.9% and drove over one third of the gain, with energy up 2.1% on the month and 16.3% on the year. August PPI, released Sept 10, rose 0.4% on the month and 5.4% from a year earlier, up from 4.7% in July. 25 basis point hike odds stood at nearly 87% as of 12:26pm ET to nearly 90% as of 1:40pm EDT on Sept 11 intraday, corroborated by around 85% and about 86% prints, versus about 72.4% on Sept 10 and 58% to 59.4% a week earlier. Odds move continuously.

For holders, the tension is core cooling against pipeline heat. Core year over year at 2.4% in August is the patience case, while supercore at 3.0% in August, up from 2.8% in July, plus PPI energy up 24.3% from a year earlier and diesel up 24.1% on the month, argue for caution on multiples until pass-through fades. Duration repriced first at the front end, with the 2-year rising 7.8 basis points to 4.628% on Sept 11 and touching its highest since July 2024, while the 10-year rose to 4.992% earlier Sept 11 immediately after 8:30am ET CPI, then stood at 4.97% by 4:37pm EDT and 4.93% on a second print. Yields move continuously. Equities rallied into the print, with the S&P 500 closing at 7,656.98, up 0.86% on Sept 11.

The call is Sept 16 at 2pm ET, with a Summary of Economic Projections and press conference. The funds target stands at 3.50% to 3.75% in the Sept 9 window, and EY-Parthenon and Nationwide flipped on Sept 11 to expect 25 basis points to 3.75% to 4.00% on energy spillover concern. The risk is that oil, gasoline and diesel extend to other goods, services and expectations, keeping December live. The Reuters Sept 4 to 9 poll showed 65 of 93 expecting a September hold, down from about 90% in August, with 52 of 93 expecting a hold all year. Watch the SEP, the press conference on underlying inflation, and energy pass-through.