US inflation drops further making rate cut likely

Inflation in the US continued to cool last month, despite rising rents, clearing the way for the US central bank to cut interest rates.

Consumer prices rose 2.5% over the 12 months to August, as prices for petrol, used cars and trucks, and some other items fell.

Inflation was down from 2.9% in July and marked the slowest pace since February 2021.

Analysts said the figures should help convince the Federal Reserve that high borrowing costs are working to return inflation - the pace at which prices rise - back to normal.