The United States recorded a 3.4% price increase over the 12 months ending in August, driven primarily by higher gasoline costs, according to government data.
Overall inflation remained flat compared with July, the Bureau of Labor Statistics reported.
The data precedes the Federal Reserve’s policy meeting next week, where analysts anticipate a rate hike to curb accelerating price growth.
U.S. households are feeling heightened financial strain, particularly at the pump, as diesel prices surged to a record average of over $6 per gallon on Friday.
The fuel surge stems from elevated global oil prices, disrupted by the U.S.–Iran conflict; Brent crude remains above $100 per barrel after recent escalations.
Beyond pump prices, higher oil costs raise transportation expenses, which are often passed on to consumers in the form of pricier food and essential goods, further inflating the cost of living.
The BLS reported that gasoline prices jumped 3.9% in the past month alone, contributing to over a third of overall inflation. Meanwhile, real average hourly earnings declined 0.3% year‑over‑year, underscoring the wage‑price gap.
Expectations for a rate increase are growing, driven by persistent inflation, a robust labor market, and President Donald Trump’s comment that oil prices will likely stay high until the Iran conflict concludes after the November election.
Federal Reserve Chair Kevin Warsh has remained tight‑lipped on future moves, but his emphasis on curbing price growth has reinforced market anticipation of an upcoming hike.
CME Group data shows that 85% of traders are now pricing in a quarter‑point rate increase at next week’s meeting.