Inflation fell in August to the lowest level in over three years, adding to the Federal Reserve's case for an interest rate cut next week even as prices remained uncomfortably high for millions of Americans.

The Labor Department on Wednesday said that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – rose 0.2% in August from the prior month, in line with the expectations of economists polled by LSEG.

Prices climbed 2.5% in August from the same time last year, slightly less than LSEG estimates and down from 2.9% in July. That's the lowest level since February 2021.

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