CPI Comes in Warm, But Jobless Claims Enough to Keep Mortgage Rates Flat
The latest economic data delivered a mixed bag for the Federal Reserve and markets on September 11, 2025. The Consumer Price Index (CPI) for August showed hotter-than-expected inflation, with a 0.4% monthly rise that pushed the annual rate to 2.9%. This “warm” reading could give the Fed pause on aggressive rate cuts. But a surprise spike in initial jobless claims to 263,000—the highest in four years—eased recession fears just enough to hold mortgage rates steady. For homebuyers and refinancers, this means rates stayed around 6.35% for a 30-year fixed, offering a brief breather in a volatile year.
Breaking Down the CPI Report: Inflation Heats Up
The Bureau of Labor Statistics released its CPI summary for August 2025 early Thursday morning. Headline CPI climbed 0.4% month-over-month, beating forecasts of 0.3% and marking the largest gain since January. On an annual basis, inflation rose to 2.9%, up from 2.7% in July and the quickest pace since early 2025.
Core CPI, which strips out volatile food and energy prices, held steady at 0.3% monthly and 3.1% yearly—right on economist expectations but still well above the Fed’s 2% target. Shelter costs drove much of the increase, up 0.4% as owners’ equivalent rent ticked higher. Used cars jumped 1.0%, airline fares soared 5.9%, and hotel prices rose 2.3%.
Economists like Priya Misra of JPMorgan called it a “hotter report,” pointing to tariff impacts on goods like household furnishings and recreational items. Food prices rose 2.9% year-over-year, with nonalcoholic beverages forecasted at 3.6% for all of 2025. While not a disaster, the uptick signals persistent pressures that could delay deeper Fed easing.
Jobless Claims Spike: A Cooling Labor Market Signal
Just hours after the CPI drop, the Labor Department reported a sharp rise in initial jobless claims. For the week ending September 6, filings surged to 263,000—up 27,000 from the prior week’s revised 236,000 and well above the 235,000 consensus forecast.