Consumer price inflation cooled for the fifth straight month in August at 2.5% annually, inching closer to the Federal Reserve’s target of 2% inflation one week before the central bank’s next rate decision. Monthly prices rose 0.2% from July, according to data released by the Bureau of Labor Statistics Wednesday, Sept. 11.

Core inflation, which removes volatile and energy prices, rose 3.2% annually and 0.3% compared to July. While the annual number came in as expected, the monthly increase is hotter than the 0.2% expected.

Shelter continues to be the main driver of core inflation as the index went up 0.5% compared to July and is still up 5.2% year-over-year. Shelter price increases are responsible for 70% of the annual rise in core prices.

The price of groceries didn’t budge on a monthly basis, and food away from home rose 0.3% over July. Energy prices dropped 4% annually while gas prices are down 10.3% compared to August of last year. 

New car prices were unchanged for the month and fell 1.2% on an annual basis. Used cars, which had a massive spike amid the latest inflation run, dropped 10.4% compared to August 2023. 

The BLS also reported the airline fares index rose 3.9% in August after declining in each of the previous 5 months.

August’s inflation report is one of the last data puzzle pieces ahead of the Federal Open Markets Committee meeting next week. The Federal Reserve is expected to cut interest rates for the first time since 2020. The central bank has a dual mandate and uses inflation data and unemployment to make its policy decisions.

The U.S. economy missed expectations and added just 142,000 jobs in August, but the unemployment rate did come off July’s surprise 4.3%, settling at 4.2%.