WASHINGTON – US inflation stayed stubbornly high in August, bolstering the case for the Federal Reserve to raise interest rates at its meeting next week.Overall consumer prices rose 0.4 per cent from July on higher energy prices, and 3.4 per cent from a year earlier.The report suggests inflation made little progress toward the Fed’s goal in August amid ongoing pressures from the Iran war, tariffs and the data center buildout.“Those numbers are still stubborn. This to me is an in-line print which will probably not satisfy anybody, whether you’re bullish or bearish,” said Joe Saluzzi, co-founder and co-head of equity trading at Themis Trading.The US central bank will likely see the numbers as tipping the scale in favour of the first rate increase in three years after some officials suggested the Sept 15 to 16 decision could come down to what the figures showed.The main US stock indexes were set to open higher on Sept 11, putting them on track to end a rough week on a positive note.Fluctuating interest rate expectations have left the market backdrop fragile, as stocks navigate a confluence of headwinds, including the intensifying Middle East conflict and elevated Treasury yields.The consumer price index report followed slightly hotter-than-expected producer price index reading on Sept 10 that did little to reassure investors.“We believe that the Federal Reserve needs to respond to these in the near term or risk a repeat of the high inflation of the 1970s, which would represent yet another failure of discretionary monetary policy,” Said Haidar, founder of Haidar Capital Management, said.Fed chairman Kevin Warsh has been reluctant to tip his hand on the central bank’s next move, but, in a speech in August, he said the Fed would “have work to do” if it could not “be confident that underlying inflation is moving to our objective, clearly and at sufficient speed”.Warsh’s job as chairman next week will be to corral his colleagues, while also providing a clear-cut rationale for whatever decision is ultimately made.There is already a group of policymakers who support higher rates on the basis that the Fed’s current policy settings are not restraining demand.Higher rates would not only expedite the return of 2 per cent inflation, they argue, but also ensure that expectations about inflation do not suddenly shift higher.Raising rates just months before the election would undoubtedly stoke tension with President Donald Trump.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”.Frustration over higher prices, especially for petrol and food, has led to a sharp erosion in Trump’s approval ratings and could cost his Republican party control of the US Congress in the November midterm elections.The US economy, meanwhile, is contending with resurgent energy prices as the Middle East and Russia-Ukraine wars hit supplies. This week, oil prices pushed above US$100 a barrel and US retail diesel prices rose to a record. BLOOMBERG, REUTERS