US Inflation Accelerates in August as Gas Prices Skyrocket

US inflation accelerated in August, according to data released by the Labor Department. The consumer price index rose 3.4% compared to a year ago, mirroring July's figure but increasing month-over-month by 0.4%. This increase quadrupled the 0.1% jump seen in the previous month.

Gas prices played a significant role in this acceleration, spiking 3.9% from July to August and leaving them more than 27% higher than last year's levels. The nationwide average cost of a gallon of gas is now $4.30, up 7% from the previous month.

While excluding food and energy categories, core prices rose 2.4% in August compared to a year ago, down slightly from July's 2.5%. However, on a monthly basis, core prices increased by 0.3%, the largest jump since April.

The surprising increase in core prices may embolden Federal Reserve officials who have pushed for higher interest rates. Wall Street investors now see an over 80% chance that the Fed will increase rates September 16, according to CME Fedwatch, a 10-point increase from Thursday.