US Consumer Prices Hold Firm Amid Iran Tensions
US consumer prices remained stubbornly high in August as tensions between the US and Iran pushed energy costs up. The annualized inflation rate was 3.4%, unchanged from July's reading, but still above pre-war levels. Core inflation, which strips out volatile energy and food prices, increased to 2.4% in August.
The main driver of inflation remains energy prices, with diesel hitting a record high of $6 per gallon for the first time ever. Gas prices at the pump averaged $4.29 per gallon, up from $3.19 last year. This is a worrying sign for Republicans ahead of the midterms, where consumer sentiment has hit record lows.
The White House is aware of the impact on elections, with President Trump promising a $5,000 'dividend' if Republicans win control. The Federal Reserve will meet next week to discuss interest rates, which can affect prices by changing the cost of loans and mortgages. Some Fed economists are calling for higher interest rates to combat inflation.