But CUNA Senior Economist Dawit Kebede said the Federal Open Market Committee (FOMC) is still likely to hold rates at their current level at its next meeting Sept. 19-20. He cited the slowdown in core inflation over 12 months from 4.7% in July to 4.3% in August, and the 2.8% average monthly increase over the past three months.

Dawit Kebede

"It indicates core inflation is still trending down in the right direction to the Federal Reserve's target despite the slight uptick in August," Kebede said.

Kebede added, "Recent labor market reports indicate a better balance in labor demand and supply as hiring slowed down and labor supply increased, raising the unemployment rate higher. There is nothing in this inflation report that will prompt the Federal Reserve to increase rates during their next meeting."

NAFCU Economist Noah Yosif said he also believes the Fed will hold rates at this month's meeting, but he said the increase to 0.6% "nudges the FOMC towards a more hawkish position."

Noah Yosif

"The Fed will likely seek additional data to confirm a temporary or an extended spike in headline and, potentially, core inflation as higher energy prices permeate throughout the broader economy, thus the expectation of a pause in tightening when the committee meets next week remains in place," Yosif said.

"Even if future inflation data continues to exceed expectations, it is more likely to compel the FOMC to leave rates at their present level for longer, rather than forcing more rate hikes," he said.