The consumer price index was up 3.4 percent, annualized, in August, the same reading as reported in July. However, month over month inflation rose 0.4 percent from July, four times the 0.1 percent increase from June to July. This inflation report did not deliver the results that would allow the Fed to leave rates unchanged.
The core inflation rate, excluding food and energy, was up 2.4 percent in August, down slightly from the 2.5 percent experienced in July. Month-over-month, core prices were up 0.3 percent, the largest monthly increase since April.
Diesel prices hit record highs in August, and more expensive fuel prices spill over into shipping costs, driving up prices for the consumer. It looks like energy prices will remain elevated, as President Trump has stated gas prices will not go down until November, but that is dependent on some sort of truce in the Middle East.
The treasury stepped up buybacks of Treasury bonds to try and keep long-term interest rates lower, but that action is unlikely to hold off a rate increase this week. Investors feel, with 80 percent certainty, rates will go up on September 16.