Consumer prices rose at a 3.4% annual rate last month, the same pace as July, according to the latest Consumer Price Index from the Bureau of Labor Statistics.
That likely strengthens the case for a Federal Reserve rate hike to tame inflation and prevent price increases from becoming more entrenched.
Inflation has accelerated since the war with Iran began, and central bankers are watching to determine whether price pressures are spreading through the economy. Fed officials are set to meet next week to decide the next move on interest rates.
On a monthly basis, prices rose 0.4%, an acceleration from July’s 0.1% rate. Gasoline prices, up 3.9%, accounted for a third of the monthly price increase.
But for the Fed, the most worrisome aspect of August’s inflation report is likely the evidence that inflation has spread beyond the pump. When stripping out food and energy costs, so-called core inflation rose 2.4% in the 12 months ending in August, down from 2.5% in July. On a monthly basis, core rose 0.3%.
