WASHINGTON (AP) — Inflation rose last month as the price of gas, groceries, hotel rooms and airfares rose, along with the cost of clothes and used cars.
Consumer prices increased 2.9% in August from a year earlier, the Labor Department said Tuesday, up from 2.7% the previous month and the biggest increase since January. Excluding the volatile food and energy categories, core prices rose 3.1%, the same as in July. Both figures are above the Federal Reserve’s 2% target.
The reading is the last the Fed will receive before its key meeting next week, when policymakers are widely expected to cut their short-term rate to about 4.1% from 4.3%. Still, the new inflation data underscores the challenges the Fed is facing as it experiences from President Donald Trump to cut rates. Inflation remains stubborn while the job market is , diverging trends that would require polar reactions from Federal Reserve policymakers to address.
Hiring and was last year. The unemployment rate ticked up in August to a still-low 4.3%. And weekly unemployment claims , the government also reported Thursday, a sign layoffs may be picking up.
Typically the Fed would cut its key rate when unemployment rose to spur more spending and growth. Yet it would do the opposite and raise rates — or at least keep them unchanged — in the face of rising inflation. Last month, Chair Jerome Powell signaled that Fed officials are increasingly concerned about jobs. Yet stubbornly high inflation could keep the Fed from cutting very quickly.
On a monthly basis, overall inflation accelerated, as prices rose 0.4% from July to August, faster than the 0.2% pace the previous month. Core prices rose 0.3% for the second straight month.
Gas prices jumped 1.9% just from July to August, the biggest monthly increase since a 4% rise in December. Grocery prices climbed 0.6%, pushed higher by more expensive tomatoes, apples, and beef. The cost of travel soared, with air fares rising 5.9% just from July to August and hotel room prices rising 2.3%. Rental costs also increased, rising 0.4%, faster than the previous month.
The impact of tariffs appeared to be mixed, with many imported goods rising in price but modestly. Clothing costs rose 0.5% just last month, though they are still just slightly more expensive than a year ago. Furniture costs rose 0.3% and are 4.7% higher than a year earlier. Appliance costs also rose from July to August, after falling the previous month.
The inflation data arrives at the same time that Trump has sought to as part of an effort to assert more control over the Fed. Yet late Tuesday, a court said the and ruled that Cook could keep her job while the dispute played out in the courts.
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