Inflation Spikes as Gas Prices Soar
US inflation accelerated in August as gas prices spiked in response to renewed fighting in the Middle East, putting further pressure on Americans' finances. The Labor Department reported that the consumer price index rose 3.4% last month compared to a year ago, matching July's increase.
The core prices, excluding food and energy categories, were 2.4% higher in August than a year ago, down slightly from July's 2.5%. However, on a monthly basis, core prices rose 0.3% from July to August, the largest increase since April.
This increase has emboldened those Federal Reserve officials who have pushed for higher interest rates. Wall Street investors now see a more than 80% chance that the Fed will raise rates next week, according to CME Fedwatch.
President Donald Trump's promise of $5,000 payments to every American adult if the GOP keeps a majority in Congress has also been met with skepticism, as it could stoke inflation further. Treasury Secretary Scott Bessent has stepped up buybacks of Treasury bonds in an effort to keep longer-term interest rates lower.