Inflation ticked up in August, setting the stage for Fed to hike
U.S. inflation rose by 0.4% in August, driven by costs in technology, airfare, and communication, potentially signaling a Federal Reserve rate hike. The report notes that rising energy prices and shelter costs continue to pressure consumer budgets.
Why it matters
Persistent inflation and the prospect of higher interest rates directly impact consumer purchasing power and the broader U.S. economic outlook.
The prices U.S. consumers pay for goods and services continued to climb in August, with the Bureau of Labor Statistics finding that inflation ticked up even before renewed conflict in the Middle East sent oil prices soaring again. The consumer price index rose by 0.4% for the month — an annual rate of 3.4% — with significant jumps in the technology, airfare and communication sectors leading the way. Core inflation, a closely watched indicator that excludes food and energy prices, jumped more than economists had expected, which many immediately saw as opening the door for a Federal Reserve rate hike next week. “America still has an inflation problem,” Heather Long, chief economist at Navy Federal Credit Union, wrote on X.
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