Fed Flags Moderate Inflation Growth Ahead of Policy Meeting

The US economy has been growing modestly since early July, but inflation-wary consumers have limited spending increases. The Federal Reserve's 'Beige Book' survey of its 12 district banks reported that loan volumes held steady or rose slightly. However, auto sales were lackluster due to low consumer confidence, high fuel prices, and rising financing costs.

The Fed survey flagged a moderate increase in inflation in eight districts and a robust gain in one district. With the central bank's policy meeting on September 15-16 approaching, officials have identified inflation as their top concern. Some policymakers have indicated that they will likely favor raising the federal funds rate if price pressures persist at current levels.

Energy prices have surged during the past week, with Brent crude oil futures rising 9.1% after fighting resumed between US and Iranian forces. The inflationary impact of tariffs persists among retailers and manufacturers, according to the central bank.