On Tuesday, the U.S. Labor Department announced that the Consumer Price Index for All Urban Consumers (CPI-U) in August surged 8.3 percent from a year ago, slightly down from the previous month but still at an elevated level.

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The CPI-U ticked up 0.1 percent in August on a seasonally adjusted basis after being unchanged in July. The June CPI of 9.1 percent marks the largest 12-month increase since the period ending Nov. 1981. In July, the CPI soared 8.5 percent. The latest data indicates that inflation might be easing amid the Federal Reserve's interest rate hikes.

Despite that, the CPI has remained over 8 percent since March, a stark reminder that the Fed has a long way to go to bring elevated inflation under control.

The modest 0.1 percent month-over-month gain "masks what was a disappointing report," Sarah House and Michael Pugliese, economists at Wells Fargo Securities, said, noting that “while headline inflation was kept in check by falling gasoline prices, core inflation increased 0.6 percent over the month.”

The latest inflation report showed that the core CPI, which excludes food and energy, rose 0.6 percent in August following a 0.3-percent rise the prior month. Core CPI jumped 6.3 percent over the last 12 months, a larger increase than the 5.9-percent increase for the 12 months ending in July.

The energy index fell 5.0 percent over the month, after a decline of 4.6 percent in July and a surge of 7.5 percent in June. Even with the recent drop, the energy index rose 23.8 percent over the past 12 months.

The food index rose 0.8 percent over the month after growing by 1.1 percent in July, marking that smallest monthly increase since December 2021. The food index increased 11.4 percent over the last year, the largest 12-month increase since the period ending May 1979.

The central bank raised its target federal funds rate by a quarter percentage point from near zero in March, beginning its tightening cycle to curb surging inflation. In May, the Fed increased the rate by half a percentage point. It lifted the rate by three-quarters of a percentage point in June and July, the most aggressive hikes in decades.

As core CPI continues to advance at a rate far beyond the Federal Reserve's 2 percent inflation target, a 75-basis-point rate hike at next week's policy meeting "seems all but assured" at this point, said House and Pugliese.