Consumer Price Index Rises 3.4% in August

The Consumer Price Index is a measure of the average change in prices of a basket of goods and services consumed by households. It is used to track inflation and determine monetary policy decisions.

The Federal Reserve aims to keep inflation at 2% to ensure price stability and maximum employment. This goal helps to prevent prices from rising too quickly and eroding the purchasing power of consumers.

The Federal Reserve uses the Consumer Price Index as one of the key indicators to determine its monetary policy decisions, including setting interest rates. When inflation is high, the Fed may raise interest rates to slow down the economy and reduce inflation.

The August report is the last before the Federal Reserve's interest-rate decision. It provides the Fed with the most up-to-date information on inflation, which will help inform its decision on whether to raise or lower interest rates.

The Consumer Price Index is calculated by the Bureau of Labor Statistics, which collects data on the prices of a basket of goods and services consumed by households. The index is then calculated by averaging the price changes of these items over a period of time.