August Inflation Holds Steady, Rate Hike Odds Surge

US consumer inflation remained steady at 3.4% in August, keeping pressure on the Federal Reserve to raise interest rates. The August data showed a 0.4% increase from July, matching analyst expectations.

The latest reading leaves inflation well above the Fed's long-term target of 2%, with prices easing sharply from the 9.1% peak reached during the pandemic. The energy index rose 2.1% in August, driven by a 3.9% surge in gasoline prices.

Gasoline prices have increased by 44% since the start of the Iran war in February, according to data from the American Automobile Association (AAA). U.S. diesel prices hit an unprecedented $6 per gallon on Friday, adding to costs for transportation, farming, and construction.