US inflation data for August has been released. Headline inflation matched expectations, while monthly core inflation exceeded forecasts.
The Consumer Price Index rose 0.4% in August. Economists had also forecast a 0.4% increase. The index gained 0.1% in July.
Annual inflation remained at 3.4%. The figure matched both market expectations and July’s reading.
Core inflation, which excludes volatile food and energy prices, presented a less favorable picture. Core CPI increased 0.3% month over month, exceeding the 0.2% forecast.
Following the data, Bitcoin fell as low as $76,700. Persistent inflation strengthened expectations that the Federal Reserve could raise interest rates next week.
US core inflation exceeds expectations
Core CPI had risen 0.2% month over month in July. The August figure showed renewed momentum in underlying price pressures.
Meanwhile, annual core inflation came in at 2.4%, matching market expectations. It had stood at 2.5% in July.
The report therefore delivered mixed signals. Annual core inflation slowed, while the monthly increase exceeded forecasts.
The Federal Reserve closely monitors core inflation indicators when setting interest rates. August’s 0.3% increase suggested that price pressures were not yet fully under control.
Fed rate hike expectations strengthen
The August inflation report carried particular importance ahead of next week’s Fed meeting. Fed Chair Kevin Warsh said during his Jackson Hole speech that the central bank might need to act unless inflation showed signs of slowing.
Rate hike expectations climbed rapidly in the bond market following those comments. Investors had previously expected no further increases during the remainder of 2026. Recent developments, however, brought as much as 75 basis points of tightening this year into consideration.
The shift in expectations also affected US Treasury yields. The 10-year Treasury yield climbed from around 4.60% to nearly 5%.
The two-year Treasury yield, which is more sensitive to Fed policy, rose from 4.20% to 4.56%. Higher yields increased pressure on risk assets such as Bitcoin, which does not generate interest income.
Bitcoin price declines after inflation data
Bitcoin fell to $76,700 in the minutes following the report. According to the latest market data, the price later stabilized at around $76,955.
The largest cryptocurrency lost approximately 1% over the past 24 hours. Its weekly decline reached 5.4%.
Ethereum traded at around $2,456 after losing nearly 3% over the past seven days. XRP’s weekly decline approached 8.8%, while Solana fell around 4.8%.
Selling pressure emerged as traders concluded that the inflation report gave the Fed more room to raise interest rates. Higher rates increase returns on traditional assets such as bonds and can weaken demand for cryptocurrencies.
The Fed’s decision next week will now play a decisive role in the crypto market’s short-term direction. Investors will follow the rate decision alongside Kevin Warsh’s comments on inflation and the policy outlook for the remainder of the year.
