Inflation picked up in August, and that keeps the heat on the Federal Reserve. The Labor Department on Friday put the annual inflation rate at 3.4%, matching July and in line with forecasts, as gasoline costs continued to bite, the Wall Street Journal reports. On a monthly basis, inflation jumped 0.4% from July to August, up from just 0.1% the previous months, reports the AP. The reading lands just days before the Fed's next policy meeting, where officials remain split on whether to hike interest rates for the first time since 2023.
Core prices, which exclude food and energy, rose 0.3% from July to August, higher than the 0.2% economists had forecast, raising expectations of a rate hike. Fed officials have said the report will be pivotal for the interest rate decision, with governor Christopher Waller hinting that a "hot" reading could push him toward a rate hike. The numbers don't fully reflect the sharp, late-summer jump in oil, with US crude now above $100 a barrel and gasoline averaging $4.27 a gallon, up 44% since the war with Iran began in February, NBC News reports. Diesel hit a record average of $6 per gallon Friday.
Some newer forces are adding pressure to prices. An AI-driven scramble for memory chips is lifting electronics prices, with Apple among those passing on costs, the Journal reports. Tariffs—especially on Canadian goods—also threaten to keep prices elevated. Economists warn that if today's higher prices start to shape what workers and businesses expect tomorrow, inflation could become harder to tame even if current shocks ease.
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