U.S. inflation accelerated in August at a speed that is likely to keep the Federal Reserve cautious about lowering borrowing costs too quickly once it restarts cuts as soon as next week.

The Consumer Price Index, released on Thursday by the Bureau of Labor Statistics, rose 2.9 percent compared with the same time last year, the fastest annual pace since the start of 2025.

“Core” inflation, which the central bank tracks as a gauge of underlying inflation since it strips out volatile items like energy and food prices, steadied at 3.1 percent.

The overall measure of inflation rose 0.4 percent for the month, slightly higher than economists had expected. The core measure rose 0.3 percent.

The inflation data has been pivotal to the Fed’s debate about not only when it should lower interest rates again after a long pause but also the speed at which the central bank moves once that process kicks off.

Officials have opted to proceed cautiously so far this year given concerns about the effect that President Trump’s tariffs will have on consumer prices. They have opted to keep interest rates steady all year at a range of 4.25 percent to 4.5 percent, after a series of reductions in the final months of 2024. That approach has angered Mr. Trump, who wants borrowing costs substantially lower.