US consumer prices increased 3.4% in August 2026 from a year earlier, matching economists’ expectations and remaining unchanged from July, according to the latest data from the US Bureau of Labor Statistics. However, prices rose faster on a monthly basis, increasing 0.4% in August compared with 0.1% in July. The acceleration comes as energy costs rise sharply amid the ongoing conflict involving the US and Iran.
What Does The latest US CPI Data Show?
The annual inflation rate remained at 3.4%, while core inflation, which excludes food and energy prices, eased to 2.4% from 2.5% in July. The monthly increase was the strongest since May, highlighting renewed price pressure despite the moderation in underlying inflation.
How Could The Inflation Data Affect The Fed?
The latest inflation figures have strengthened expectations of a Federal Reserve rate hike at its September 16 meeting. According to CME’s FedWatch tool, the probability of a quarter-point rate increase rose to 91.6% after the inflation report, up from 67.4% before the data was released. The Fed has kept its benchmark interest rate at 3.50%-3.75% since December. The latest CPI report could add to pressure on policymakers to respond to persistent price increases.
Why Are Energy Prices Rising In The US?
Energy costs have become a major source of inflationary pressure. US crude prices moved above $100 a barrel this week as fighting involving the US and Iran intensified around the Strait of Hormuz. Diesel prices have also surged. The national average crossed $6 per gallon, while petrol prices averaged around $4.22 per gallon, according to the American Automobile Association. Higher fuel costs can eventually push up transportation, food and delivery expenses as businesses pass increased operating costs on to consumers.
What Is Driving The Fuel Supply Pressure?
The energy market is facing disruption from multiple conflicts. Attacks on Russian refineries have contributed to reduced diesel availability, while disruptions around the Strait of Hormuz have further affected global supplies. Several refineries have also suspended operations, putting additional pressure on fuel markets. Economists expect some of the impact of higher energy prices to filter through to consumer goods with a delay.
