So-called core CPI, which excludes often volatile energy and food prices, increased 6.3% in August from a year earlier, up markedly from the 5.9% rate in both June and July—a signal that broad price pressures strengthened.

On a monthly basis, the core CPI rose 0.6% in August—double July’s pace. Investors and policy makers follow core inflation closely as a reflection of broad, underlying inflation and as a predictor of future inflation.

“These data are hot and are a reflection of feed-through of higher energy prices from earlier this year. Inflation is a stubborn thing,” said

Jamie Cox,

managing partner for Harris Financial Group, in a statement.

U.S. stocks fell and bond yields jumped as the report showed that price pressures are proving more persistent than investors anticipated. By late morning Tuesday, the Dow Jones industrials fell more than 800 points, or more than 2.6%. The S&P 500 tumbled 2.6%, while the Nasdaq Composite slid 3.3%. The yield on the benchmark 10-year U.S. Treasury note was 3.416%, according to Tradeweb, up from 3.297% just before the inflation data was released and 3.361% at Monday’s close. Bond prices and yields move inversely.

Inflation has recently shown signs of easing for some goods and services. Gasoline prices declined 10.6% in August, according to the CPI report. The national average price of regular gasoline was $3.71 a gallon on Tuesday, down 26% from the peak in June, according to OPIS, an energy-data and analytics provider owned by Dow Jones & Co., publisher of The Wall Street Journal.

But prices for most goods and services remained much higher than a year earlier. On a monthly basis, prices rose for more items tracked by the CPI in August than in July.

Food prices continued to climb sharply this past month, rising 0.8% in August from July, as did those for new vehicles. Prices also rose last month for medical care, education, electricity and natural gas.

One key channel of inflation is rising housing costs, which rose 0.7% in August from July. These costs account for nearly one-third of the overall CPI. Once housing costs start to rise, that momentum tends to persist.

“While there are some encouraging aspects to this report, the underlying dynamic is that core continues to rise and pressures have spread out further into housing, which requires the Federal Reserve to continue to lift the policy rate higher, likely north of 4%,” said

Joseph Brusuelas,

chief economist at RSM U.S. LLP.

Fed officials lifted interest rates by 0.75 percentage point at each of their past two meetings to fight inflation, and they appear on track to approve another increase of that size at their gathering Sept. 20-21.

Fed Chairman

Jerome Powell

said in late August that, while rate increases would bring down inflation, “they will also bring some pain to households and businesses.”

The average household is spending $460 more each month to buy the same basket of goods and services as last year, said

Ryan Sweet,

senior director of economic research at Moody’s Analytics.

“That’s a big burden, particularly on lower-income households. That’s one reason the Fed is laser-focused on getting inflation down,” Mr. Ryan said. “They have a long way to go before they get it back down to where they want it to be, but we’ve seen small steps in the right direction.”

Airfares fell last month as summer travel waned and students headed back to school, as did prices for used cars. Still, broad price pressures have proven resilient, forcing the Fed to keep raising rates, said

Kathy Bostjancic,

chief U.S. economist at Oxford Economics.

“Today’s surprisingly strong inflation data indicate the Fed needs to continue to be aggressive in its policy tightening,” she said, adding that this leaves the economy poised to enter a mild recession the first half of next year.

Inflation started surging last year as the U.S. economy recovered from the effects of the Covid-19 pandemic. Prices climbed because of a mix of factors, including strong consumer demand stoked by lower interest rates and government stimulus, as well as supply-chain disruptions. Higher food, energy and commodity prices stemming from Russia’s invasion of Ukraine this year further spurred inflation globally.

Rampant inflation has driven

Brad Botwin,

65, to overhaul how he shops for groceries and gets around town.

“It’s just shocking, the grocery prices. I find myself buying three of something instead of one because I know the prices are going to go up,” said Mr. Botwin, a retired federal worker in Rockville, Md. “I didn’t think this way before all this—I used to just throw whatever I wanted into the grocery cart.”

Despite the drop in gasoline prices since June’s peak, he is still driving less to save on fuel costs. “I feel better that I’m paying slightly less,” said Mr. Botwin. “But the thing is, the initial wound is still twice the price.”

Some broader measures suggest economic demand is weakening, which could damp price pressures. U.S. gross domestic product shrank in the first half of the year, according to the Commerce Department.

Some large employers, including

Ford Motor Co.

,

T-Mobile US Inc.

and

Wayfair Inc.,

have announced job cuts recently.

However, the overall labor market remains strong, with employers adding 315,000 jobs in August, while the unemployment rate edged up but remained low at 3.7%.

The competition for workers has fueled wage increases, but they were more than offset by inflation in August, the CPI report showed. After adjusting for inflation, average weekly pay declined 0.1% last month, down from a 0.8% gain in July.

“Supply constraints in the labor market and in some inputs are likely playing a role. But so is demand, as jobs and wage growth, along with savings, remain robust,” said

Alejandra Grindal,

chief economist at Ned Davis Research.

Supply-chain disruptions have shown signs of moderating recently, with the New York Fed’s index of supply-chain pressure for August falling to its lowest point since January 2021. Economists expect those improvements—helped by cooling consumer demand for goods—to slow price increases for goods.

The easing of supply-chain disruptions has put an end to a stressful year for

Jaja Chen,

co-owner of Cha Community, a group of cafes and food trucks she runs in Waco and Temple, Texas, that specialize in Taiwanese boba tea and cuisine.

Port logjams and delayed deliveries left her team struggling to find ingredients for signature offerings of dumplings and boba tea. “There were many times when we were on the verge of not being able to have boba tea anymore, which was really scary because that’s the main reason people visit our shops,” said Ms. Chen, who runs Cha Community with her husband,

Devin Li.

In January, they raised prices across the board, in part to offset higher costs.

But the inflow of imported foods has improved significantly in recent months, she said, adding that if they raise prices next year it would be to fund another hire; the need to cover higher ingredient prices is no longer an urgent concern.

“Things have definitely improved, even compared to earlier this summer,” she said. “We definitely don’t have as much worries about shortages anymore.”

Write to Gwynn Guilford at gwynn.guilford@wsj.com