The Fed has been holding its benchmark interest rate steady while it monitors inflation, which is well above its target rate of 2%. Wall Street has been betting there will be at least one rate hike by the end of the year. Higher rates would make borrowing more difficult and slow economic growth, which could cool inflation.

The report comes at a pivotal moment for the Federal Reserve, which is scheduled to meet next week to decide whether to hike interest rates.

The details in the latest Consumer Price Index report could compel the Federal Reserve to raise interest rates.

Although the CPI data is important, the Fed's 2% inflation benchmark is tied to the annual growth in the personal consumption expenditures, or PCE, price index produced by the Bureau of Economic Analysis.

August CPI data leaves Kevin Warsh to choose between acting on his inflation warnings or risking new doubts about his control of the central bank.