Fed Forced to Raise Rates Amid Soaring Gas Prices

The US Federal Reserve's policymakers have been debating whether to raise interest rates in response to inflation. The latest data from the Bureau of Labor Statistics has closed that debate, with consumer prices rising 3.4% in August compared to the same month a year earlier.

This is above the Fed's 2% target and well ahead of economists' forecasts. Gasoline prices are doing most of the work, surging 27.4% annually and accounting for more than a third of August's overall price increase.

However, when energy and food prices are removed from the equation, a different picture emerges. Core CPI, the measure used by the Fed to gauge underlying price pressure, came in at 2.4% year-over-year.

This inflation is not being driven by an overheating American economy, but rather by the conflict in the Middle East, which has disrupted oil supplies and led to higher energy prices.