This photo shows bananas for sale at a Walmart store in Los Angeles County, California, the United States, May 21, 2025. [Photo/Xinhua]

The U.S. Labor Department reported on Thursday that the U.S. consumer price index (CPI) rose 0.4 percent in August on a seasonally adjusted basis, putting the annual inflation rate at 2.9 percent.

The annual inflation rate rose 0.2 percentage points from the previous month, reaching the highest level since January.

Economists surveyed by Dow Jones had expected increases of 0.3 percent and 2.9 percent, respectively.

The core CPI, which excludes food and energy prices, increased by 0.3 percent in August. On a 12-month basis, the index went up 3.1 percent, which was in line with forecasts.

The report came as the U.S. Federal Reserve prepares for its two-day meeting ending Sept. 17, when it is widely expected to cut rates.

Despite rising prices, markets continue to anticipate a 90.8 percent chance of a quarter-point interest rate cut, alongside a 9.2 percent chance of a half-point cut, according to the CME FedWatch tool. Traders still anticipate a total of 75 basis points of easing by the end of the year.

Adding to the picture of a cooling labor market, weekly jobless claims in the United States jumped to 263,000, the highest in four years and well above the expected 235,000. This sharp increase followed the previous week's revised figure of 236,000.

Dow, S&P 500 and Nasdaq futures ticked higher following the release of the data.