MacroSEP 13, 2026

August CPI Locks In Fed Hike Bets: What a 3.75%-Plus Rate Means for Small-Business AI Tool Budgets

Core CPI ran hotter than expected at 0.3% in August, pushing odds of a September 16 hike to 90% and raising the ROI bar every founder-led buyer now has to clear on growth spend.

BY KAI TRUSCOTT · MACRO & OPINION

Core CPI rose 0.3% in August, one tick above the 0.2% consensus, and the futures market did what futures markets do: repriced. Odds of a quarter-point hike at the September 15-16 FOMC jumped to roughly 90% on CME FedWatch, up from about 70% the day before. For a small business already budgeting into a 3.5%-3.75% fed funds rate, the working assumption now is 3.75%-4.00% by Wednesday.

Headline CPI came in at 0.4% month-over-month and 3.4% year-over-year, matching the Dow Jones consensus. Core sits at 2.4% year-over-year, a tenth softer than July’s 2.5%, but the composition is the problem. Shelter reaccelerated to 0.3% after two calmer months. Airline fares jumped 2.7%. Diesel hit a record $6.06 a gallon nationally, up more than 60% from $3.71 a year ago, and Brent has climbed above $100.

“the renewed march higher in oil, gasoline and diesel prices add to concerns that higher energy prices could spill over to other goods and services and inflation expectations,” said Nationwide chief economist Kathy Bostjancic. Fed Chairman Kevin Warsh warned at Jackson Hole that the central bank still had “have work to do” if disinflation stalled. It stalled. “Chair Warsh and others signaled that interest rates can remain on hold only if disinflation continues and today’s August report did not deliver that,” Bostjancic added. Chris Zaccarelli of Northlight Asset Management put it plainly: “There’s no guarantee that the Fed will hike next week, but it’s hard to see how the central bank can justify leaving rates on hold.”

The 2-year Treasury yield climbed 4.6 basis points to 4.594%. Equities didn’t flinch: the S&P rose nearly 1% and the Nasdaq 1.3%, a continuation of the AI-earnings and infrastructure bets Bloomberg has been tracking all summer.

For founder-led operators, the read-through is sharper than the index moves suggest. Real average hourly earnings fell 0.1% on the month and 0.3% on the year. The BLS category for computer software and accessories is up 25.4% year-over-year, tracking the June hardware hikes at Apple, Xbox, Nintendo, and Amazon tied to AI data-center memory demand. Mortgages crossed 7% Thursday. October hike odds are near 60%.

Growth budgets are being underwritten against a cost of capital that keeps climbing while wages fall in real terms. That’s the environment Jefferies flagged when it argued moat wins in the post-SaaS AI stack. September CPI lands October 14 at 8:30 a.m. ET. The bar for every discretionary tool line has quietly moved.

Sources

About the author

Kai Truscott

MACRO & OPINION

Kai Truscott writes the macro column for AI Sheet Report — capex cycles, hyperscaler spend, geopolitics of compute — and the occasional signed opinion piece. He is the only roster author who files opinion.