Phoenix 24
Stable annual inflation conceals a sharp monthly acceleration driven by record fuel costs.
WASHINGTON, UNITED STATES
United States consumer prices increased by 3.4% in the year to August, unchanged from July and consistent with economists’ expectations. The monthly reading was less reassuring: prices rose by 0.4%, four times July’s increase and the fastest acceleration since May.
The annual rate remained stable partly because current prices were compared with an already elevated period in 2025. Core inflation, which excludes volatile food and energy prices, eased from 2.5% to 2.4% annually. On a monthly basis, however, the core index advanced by 0.3%, indicating that underlying price pressures have not disappeared.
Energy was the principal source of the latest increase. Escalating conflict involving the United States and Iran, continuing disruption around the Strait of Hormuz and Ukrainian attacks on Russian refineries have restricted global supplies. Petrol averaged approximately $4.22 per gallon nationally, compared with $2.98 before the conflict, while diesel exceeded $6 for the first time in nominal terms.
Higher diesel costs affect far more than motorists. Farmers, manufacturers and freight companies depend on the fuel, meaning increases eventually reach supermarkets and other consumer markets through transportation and production expenses. Retailers have already introduced delivery surcharges, while the delayed transmission of energy costs suggests that the full inflationary effect may not yet be visible.
The report strengthens the case for the Federal Reserve to raise interest rates at its next meeting. Market expectations of a quarter-point increase climbed from 67.4% to more than 90% following publication of the data. The central bank has maintained its benchmark rate between 3.5% and 3.75% since December.
Federal Reserve Chair Kevin Warsh has argued that the labour market remains close to full employment and that financial conditions cannot be described as broadly restrictive. The latest figures leave policymakers with competing signals: core inflation is gradually declining, but the rapid monthly increase and uncertain energy outlook threaten renewed price instability.
For households, an unchanged annual percentage does not mean that living costs have stabilised. Fuel, transportation and services continue absorbing a larger share of income, while wage growth may not fully compensate for accumulated price increases. The central bank must now decide whether tighter credit can contain inflation largely imported through geopolitical disruption without unnecessarily weakening employment and investment.
Inflation may be measured in percentages, but its consequences are experienced through everyday choices.