SynopsisIn August, consumer prices in the U.S. surged, mainly due to increasing gasoline prices. This trend elevates the likelihood of an interest rate hike by the Federal Reserve, with economists predicting a monthly rise in the consumer price index of 0.4%. When excluding food and energy, the core consumer price index saw a 0.3% rise, leading to a market expectation of a 70% chance for a 25-basis-point hike.IANSU.S. consumer prices accelerated in August as the cost of gasoline rebounded after two straight monthly declines, bolstering financial market expectations that the Federal Reserve could raise interest rates next week.The Consumer Price Index increased 0.4% last month after edging up 0.1% in July, the Labor Department's Bureau of Labor Statistics ‌said on Friday. ⁠In the ⁠12 months through August, consumer inflation advanced 3.4% after rising by the same margin in July.For live updates on US Markets, click hereEconomists polled by Reuters had forecast the CPI increasing 0.4% over the month and ​climbing 3.4% year-on-year. Excluding the volatile food and energy components, the CPI rose 0.3% last month after gaining 0.2% in July. The so-called core CPI increased ​2.4% year-on-year in August after rising 2.5% in July.The U.S. central bank tracks the Personal Consumption Expenditures price indexes for its 2% inflation target.The government reported on Thursday an increase in the Producer Price Index in August, with strong rises in several key components that feed into the calculation of PCE inflation. That added to last week's robust employment ⁠report for ‌August in boosting rate hike prospects next week.The odds of a rate increase had diminished following comments by ​Fed Governor Christopher ​Waller at a Reuters NEXT Newsmaker event last week that he was inclined to argue in favor of ⁠keeping rates steady if data confirmed inflation pressures were cooling.Oil prices climbed back above $100 ​a barrel on Thursday, while diesel prices are at record highs, suggesting inflation was set to ​remain elevated and broaden out.GROWING FRUSTRATION OVER INFLATIONSome economists saw price pressures persisting because of tariffs on imports, most recently against Canada, one of the United States' top trade partners.Frustration over higher prices, especially for gasoline and food, has led to a sharp erosion in President Donald Trump's approval ratings and could cost his Republican party control of the U.S. Congress in the November midterm elections.After Thursday's PPI data, economists' estimates for August's core PCE price index ranged from as low as a 0.15% gain to as high as a ‌0.28% increase. Core PCE inflation rose 0.2% in July. Estimates for the year-on-year increase in core PCE inflation ranged from 3.2% to 3.3%. Core PCE inflation advanced 3.3% in the 12 months through July.The August PCE inflation ​report will include ​changes to the methodology, which some economists ⁠say could lower the core inflation rate by a couple of basis points.Ahead of the CPI report, financial markets priced in a roughly 70% chance of a 25-basis-point rate hike at the Fed's September 15-16 policy meeting, according to CME's FedWatch tool. The Fed's benchmark ​overnight interest rate is currently in a 3.50%-3.75% range.Fed Chairman Kevin Warsh last month said the central bank will "have work to do" if policymakers don't get the confidence they need that inflation is heading down to 2%.But Trump is pressuring the Fed to cut rates, posting on social media last week "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT." Economists have blamed what they called political intimidation for the surge in yields on long-term U.S. government bonds. Some expected the Fed to tighten policy next Wednesday to underscore its independence.Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price...moreless(You can now subscribe to our ETMarkets WhatsApp channel)Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price...moreless