WASHINGTON — U.S. consumer prices rose 3.4% in August from a year earlier as gasoline prices increased amid renewed fighting in the Middle East, adding pressure on the Federal Reserve ahead of its Sept. 15-16 policy meeting.
The Labor Department said Friday that the consumer price index increased 3.4% in August from the same month last year, matching July’s annual increase. Prices rose 0.4% from July to August, compared with a 0.1% monthly increase in July.
Gasoline prices increased 3.9% from July to August and stood 27% higher than a year earlier. The national average price reached $4.30 a gallon Friday, more than 7% higher than a month earlier.
Higher fuel costs also affected other parts of the economy. Diesel prices have climbed above $6 a gallon, increasing shipping costs for groceries and other goods transported by truck.
Airline fares increased 2.7% in August and stood more than 23% higher than a year earlier. Hotel prices rose 2.4% from July and 3.2% from a year earlier. Wireless phone services, appliances and car repairs also became more expensive.
Food and apparel prices remained unchanged from July. Egg prices increased 2.9% in August but remained sharply lower than a year earlier.
Core inflation, which excludes food and energy prices, increased 2.4% in August from a year earlier, down from 2.5% in July. Core prices rose 0.3% from July, marking the largest monthly increase since April.
The increase in core prices has strengthened expectations that the Federal Reserve will raise interest rates at its next meeting. Wall Street investors saw more than an 80% chance of a rate increase on Sept. 16, according to CME FedWatch.
Nationwide Chief Economist Kathy Bostjancic said the August report did not show continued disinflation.
“This is not one and done,” Bostjancic said, adding that uncertainty remains over when tensions in the Middle East will ease.
Economists have warned that higher oil and gas prices could spread through the economy. More expensive jet fuel can raise airfares, while higher diesel prices can increase transportation costs for groceries and other goods.
The inflation report also comes as President Donald Trump seeks to address voter concerns over prices ahead of the November midterm elections. Trump has promised $5,000 payments to every American adult if Republicans retain control of Congress, a proposal that would require congressional approval and could add to inflation.
Treasury Secretary Scott Bessent has increased Treasury bond buybacks to help keep longer-term interest rates lower. The 10-year Treasury yield reached a nearly three-year high Thursday before falling to about 4.9% in early Friday trading.
The Federal Reserve kept its benchmark interest rate unchanged at its late-July meeting. Three officials voted to raise the rate by a quarter percentage point, which would have increased it to about 3.9% from 3.6%.
Fed Chair Kevin Warsh has indicated that he may support a rate increase but has not committed to a specific decision.
